Brexit deal would hit UK economy by £100bn a year by the end of the next decade, finds study
National Institute for Economic and Social Research warns the overall value of the economy would shrink by some 3.9 per cent by 2030 compared to staying in in the EU
Image credit: PA
Theresa May's Brexit deal would hit the UK economy by £100bn a year by the end of the next decade, according to new analysis.
The assessment, carried out by the National Institute for Economic and Social Research on behalf of the pro-EU People's Vote campaign, says the overall value of the economy would shrink by some 3.9 per cent by 2030 compared to staying inside the European Union.
The startling findings come just weeks before MPs are asked to vote on May's Brexit agreement, which was signed off by EU leaders at a summit this weekend.
May will today urge them to get behind her or risk "more division and more uncertainty".
But the think tank says the Government's plan will leave Britain facing fresh barriers to trade without any of the benefits enjoyed by Norway or Switzerland. Both of those countries have accepted free movement of people, a red line for Britain in the Brexit talks.
The NIESR predicts that total trade between the UK and the EU will plummet by 46 percent by 2030 under the plan, with foreign direct investment also taking a 21 per cent hit.
It also warns of an £18-23bn drop in the public finances thanks to tax revenue falling by as much as two percent.
“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 per cent lower than it would have been had the UK stayed in the EU," the think tank says.
"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."
Liberal Democrat leader Sir Vince Cable said: "If anything, the bleak predictions contained in this report are an under-estimate of severe damage our economy will suffer in the future of this deal goes ahead because it takes no account of the draining away of confidence in business and the impact on investors who no longer see the UK as a gateway to Europe.
"The only way to resolve this looming crisis is for MPs to hand such a crucial decision back to the British people by giving them the final say on Brexit through a People’s Vote."
Labour MP Pat McFadden - who is also supporting the People's Vote campaign for a second Brexit referendum - 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."
Ministers have vowed to provide MPs with a full Treasury analysis of May's deal ahead of the hugely significant Commons vote, which is currently pencilled in for December 12.
After a rebellion by Tory MPs, the Government will also be forced to make public its own assessment of the benefits of the Prime Minister's deal compared to what the UK gets from EU membership.
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