The UK economy will be 1.9%-5.5% smaller per person by 2030 under Theresa May’s painfully agreed Brexit deal, compared to if it remained in the EU, according to new research published on Tuesday (27 November).
Meanwhile, the cost to the UK’s public finances could be as much as 1.8% of GDP, said the research by the London School of Economics, King’s College and the Institute for Fiscal Studies, which was published by the UK in a Changing Europe think-tank.
Under the backstop to the Withdrawal Agreement, which was signed by May and EU leaders on Sunday (24 November) following over 18 months of difficult negotiations, the UK, except for Northern Ireland, would leave the EU’s single market, but remain in a customs union until it can agree a new political and trading relationship.
The hit to the UK will largely be caused by lower migration and new trading costs, the research suggests.
The Brexit deal would also hand an economic hit worth 1.7% per capita to Ireland and 0.7% for the EU-27 by 2030.
However, the research warns that alternative of a ‘no deal’ Brexit would lead to economic costs of between 3.5% and 8.7% of GDP.
The threat of a ‘no deal’ scenario is one of Theresa May’s trump cards as she attempts to persuade a sceptical and divided UK parliament to back the withdrawal agreement and political declaration.
“GDP is not everything and decisions such as those on Brexit involve a number of trade-offs,” said Anand Menon and Jonathan Portes, the report’s authors, adding that “we think it important that parliament, and the country as a whole, make choices on the basis of the best available evidence.”
“The profusion of ‘cakeism’ has meant that leading Brexiters have been unwilling to discuss what price is worth paying in order that the UK leave the EU,” they concluded.
The UK government and the Bank of England are set to publish their own economic assessments of the impact of the prime minister’s Brexit deal on Wednesday afternoon, a spokesperson for May confirmed.
A study published on Monday (26 November) by the National Institute of Economic and Social Research estimated that May’s Brexit deal will leave the UK €115 billion worse off a year than if it had remained in the EU.