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Boris Johnson’s Brexit deal ‘would deliver £70bn hit to economy by 2029’

BayRadio | October 31, 2019

Boris Johnson’s Brexit deal will not deliver a “dividend”- with the economy expected to be 3.5% smaller in ten years’ time than if the UK had stayed in the EU, new analysis suggests.

Figures from the National Institute of Economic and Social Research (NIESR) suggested that the cost of a more distant relationship with Europe would come it at £70bn – a figure even greater than the damage caused by continuing uncertainty.

The forecast comes in the absence of any economic impact assessment from the government about Mr Johnson’s deal.

NIESR estimates that continuing the current uncertainty – where Britain keeps the benefits of unrestricted access to EU markets but without any long-term guarantees – would see the economy being 2% smaller.

Theresa May’s deal – repeatedly rejected by Parliament – would have seen GDP 3% smaller than had Britain remained in the EU, according to the analysis.

Mr Johnson’s plan opens the door to much looser economic ties with Europe than that agreed by his predecessor.

It does not require England, Scotland and Wales to stay in a customs union with the EU in future, making tariffs and other barriers likely.

That would lead to the economy being 3.5% smaller, the NIESR found.

A no-deal Brexit would be worse though – knocking 5.6% off the expected size of the economy.

NIESR economist Arno Hantzsche said: “We don’t expect there to be a ‘deal dividend’ at all.

“A deal would reduce the risk of a disorderly Brexit outcome but eliminate the possibility of a closer economic relationship.”

Opposition parties seized on the analysis though the Treasury said the UK was aiming to secure a “more ambitious” trade deal than that on which NISER’s findings were based.

Liberal Democrat Brexit spokesman Tom Brake said: “The Tories’ obsession with Brexit at any cost puts our future prosperity at risk.

“It is unconscionable that any government would voluntarily adopt a policy that would slow economic growth for years to come.”

A Treasury spokesman said: “A Brexit deal will give people and businesses the certainty they need to invest, which will support our economy.

“We are aiming to negotiate a comprehensive free trade agreement with the European Union, which is more ambitious than the standard free trade deal that NIESR has based its findings on.”

Written by BayRadio

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