Britain's government intensified its warnings on Wednesday about a no-deal Brexit, saying it would damage the economy while Prime Minister Theresa May's plan for leaving the European Union, opposed by many lawmakers, would soften the blow.
Britain’s government intensified its warnings on Wednesday about a no-deal Brexit, saying it would damage the economy while Prime Minister Theresa May’s plan for leaving the European Union, opposed by many lawmakers, would soften the blow.
Below are the main points of an analysis published by the government, based on different Brexit scenarios. All show a loss to the economy compared with staying in the EU, but to differing degrees.
SCENARIO BASED ON MAY’S PLANS FOR DEAL WITH EU
* By around 2035 the economy is likely to be about 2.1 percent smaller than if Britain had stayed in the EU. On a per-person basis, the hit is also 2.1 percent. But this assumes no change to current migration rules while May plans to restrict free movement of EU workers to Britain after Brexit.
* Assuming there is no longer any net migration into Britain from the EU, the loss to the economy by around 2035 is likely to increase to 3.9 percent — or 2.7 percent on a per-person basis.
* The analysis shows a negligible impact on the government’s projected borrowing under May’s proposed deal for Brexit.
“NO DEAL” BREXIT
* The economy would be likely to end up roughly 7.7 percent smaller by around 2035 than if Britain stayed in the EU — and about the same per person.
* If EU net migration to Britain drops to zero, the hit would probably be around 9.3 percent.
* In a no-deal Brexit, there would be a sizeable rise in government borrowing by the 2035/36 financial year — equivalent to an extra 2.4 percentage points of gross domestic product. The increase would be larger still without any net migration from the EU.
SINGLE MARKET MEMBERSHIP
* The government’s analysis shows a Brexit scenario similar to Britain staying in the EU’s single market would carry the smallest economic cost, although May has ruled out this option.
* In this scenario, in which freedom of movement for EU citizens continues, the economy would be only about 1.4 percent smaller by 2035 than if the UK stayed in the EU.
* There would be a small increase in government borrowing compared with staying in the EU.
FREE-TRADE DEAL WITH EU
* If Britain strikes a free trade deal with the EU that has zero tariffs on goods — but with an increase in non-tariff costs that would probably hit the dominant services industry — there would probably be a hefty economic cost.
* The analysis shows a 4.9 percent hit to gross domestic product under current migration rules, both in overall terms and on a per-person basis.
* Without any EU immigration, that loss rises to 6.7 percent overall, or 5.4 percent on a per-person basis.
* There would be a substantial increase in government borrowing by 2035/36 — equivalent to 1.8 percentage points of GDP assuming free movement continues, or 2.4 percentage points with no net EU migration.