First analysis of government's Brexit plan finds UK would be £100 billion poorer each year
PUBLISHED: 00:01 26 November 2018 | UPDATED: 09:20 26 November 2018
The first economic analysis of the government's proposed Brexit deal concludes the UK economy will be hit by £100 billion each year by 2030.
The report - comparing the proposals to the UK remaining in the EU - finds that Theresa May’s Brexit plan will cost each person more than £1,000. The total loss is the equivalent of losing the economic output of Wales or the city of London.
The analysis, produced by the National Institute for Economic and Social Research (NIESR) and commissioned by the People’s Vote campaign, confirms that MPs voting for the plan will be voting to make the country poorer.
Theresa May has previously refused to comment on whether or not her plans make the country better off. Instead she has said it would be “different”.
The NIESR report models different Brexit scenarios against a baseline of staying in the EU and finds the government’s preferred outcome which involves leaving in March 2019 and entering a transition period until December 2020. This would be followed by a free trade agreement with the EU.
The report outlines the devastating impact this will have on trade, wages, tax revenue and investment.
According to the NIESR by 2030 it will have had the following consequences:
• The UK’s Gross Domestic Product would fall by 3.9% - or £100 billion annually
• GDP per head would fall by 3% a year - amounting to an average cost per person a year of £1,090 at today’s prices.
• Total trade between the UK and the EU would fall by 46%
• Foreign Direct Investment would fall by 21%
• Labour productivity would fall by 1.3%
• Tax revenue would fall by 1.5% to 2% - the equivalent of £18-23 billion less to spend on public services at today’s prices.
The report will be formally unveiled by three former business ministers: Sir Vince Cable, the MP for Twickenham and leader of the Liberal Democrats, Pat McFadden, the Labour MP for Wolverhampton South East; and Anna Soubry, the Conservative MP for Broxtowe.
Commenting on the findings of the report the NIESR concludes: “Our key finding is that if the government’s proposed Brexit deal is implemented so that the UK leaves the EU customs union and single market in 2021, then by 2030 GDP will be around 4% lower than it would have been had the UK stayed in the EU.
“This is largely because higher impediments to services trade make it less attractive to sell services from the UK. This discourages investment in the UK and ultimately means that UK workers are less productive than they would have been if the UK had stayed in the EU.”
Sir Vince Cable said: “Nobody voted for less control or to be worse off but somehow the government have managed to come up with something that will achieve both. This is a million miles from what the Brexiters promised two years ago and will create decades of uncertainty for business and investors. It is just a promise of jam tomorrow from a government that has so far delivered nothing but chaos.”