By Lauren Howells.
The government’s proposed Brexit deal would leave the UK £100 billion-a-year poorer by 2030 compared to staying in the EU, a new study by the National Institute for Economic and Social Research (NIESR) has revealed.
According to the study commissioned by the People’s Vote campaign but conducted independently by the NIESR, the government’s deal would reduce the value of the UK’s economy by 3.9%.
“…equivalent of losing the economic output of Wales or the City of London”
This works out as an average cost of over £1,000 per person and is the equivalent of losing the economic output of Wales or the City of London, the People’s Vote campaign said. It added that this report would enable both MPs and voters to assess the impact of Brexit on trade, wages, tax revenue and investment.
The UK’s withdrawal agreement, setting out the terms of its exit from the EU, which includes citizens’ rights and the Northern Ireland “backstop”, was approved by EU leaders on Sunday.
This involves the UK leaving the EU in March 2019, then entering a transition period until December 2020, before moving to a free trade agreement.
Report modelled scenarios against staying in the EU
The study conducted by the economic think-tank modelled different Brexit scenarios against a baseline of staying in the EU.
When modelling the government’s Brexit deal, it found that by 2030, as well as total trade between the UK and EU falling by 46%, Foreign Direct Investment would fall by 21% and labour productivity would fall by 1.3%.
In addition, the report revealed that tax revenue would fall by between 1.5-2%, the equivalent of £18-23 billion less to spend on public services at today’s prices.
“Likely to be a conservative estimate of Brexit’s final cost”
It added that continued uncertainty from the proposed deal’s lack of clarity about the UK’s relationship with the EU or the rest of the world, meant “business investment and economic activity is likely to continue to be even lower”, but as it was impossible to accurately forecast the scale of this damage compared to staying in the EU, no figure was given for it and “this study is, therefore, likely to be a conservative estimate of Brexit’s final cost”.
Various other scenarios were modelled in the report, including the “orderly no deal” departure from the EU which is favoured by some Brexit supporters. It said this would reduce GDP by 5.5%, or £140 billion a year.
Labour MP, Pat McFadden, said:
“This report shows that the reality of this deal will leave Britain tens of billions of pounds poorer than if we stuck with the deal we’ve got – inside the EU. That should be the real choice offered to the British people now.
“If the Prime Minister cannot get her deal through Parliament the right thing is to go back to the public and give them the final say, this time setting the reality of Brexit against the option of staying in.”
Sir Vince Cable, who supports another referendum, said that the proposed deal left Britain with less say over key decisions than it already had as a member of the EU.
Chancellor Phillip Hammond has said that the Brexit deal is better than remaining in the EU.
Parliament is due to vote on the deal in only a few weeks’ time.