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5.5% GDP hit? More economic modelling damns May's Brexit deal

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And here's another one. Yesterday it was the National Institute for Economic and Social Research (NIESR) anticipating a 4% fall in GDP from the Prime Minister's Brexit deal. Today the academic think tank The UK in a Changing Europe is, if anything, gloomier.

The group, led by Professor Anand Menon, estimates that the Brexit deal negotiated by the Prime Minister could reduce UK GDP per capita ten years after Brexit by between 1.9% and 5.5%, compared to remaining in the EU. The cost to the public finances would be between 0.4% and 1.8% of GDP over the same period. The corresponding figures for a no deal Brexit would be 1% to 3.1%.

Professor Menon said: "In all the sound and fury over the politics of Brexit, the economic implications have been somewhat lost from sight. Obviously, this kind of economic modelling needs to be treated with appropriate caution. However, our estimates provide a clear indication of the broad scale of the impact of the deal negotiated by the Prime Minister."

Professor Jonathan Portes, senior fellow The UK in a Changing Europe, said: "The Brexit deal would leave us in a customs union with the EU for the indefinite future — but it is a long way from frictionless trade.

The additional trade barriers, combined with reductions in both skilled and unskilled migration from the ending of free movement, would leave the UK economy significantly smaller than it would otherwise have been over the medium to long term. That in turn would mean higher taxes or public spending."

This new research draws on work by the Centre for Economic Performance at the London School of Economics (LSE), King's College London and the Institute for Fiscal Studies.

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