A UK government forecast has predicted the British economy will suffer no matter what trade deal is struck with the EU. In the worst-case scenario, growth could fall 8 percent.
A confidential report prepared for the British government and leaked on Monday suggests all UK industries will be hurt by leaving the European Union, Buzzfeed News reported.
The findings are the latest embarrassment for British Prime Minister Theresa May’s government, which has faced renewed criticism from other EU leaders about the lack of a coherent Brexit strategy.
What the report says
- Buzzfeed News reported that the analysis, dated January 2018 and titled “EU Exit Analysis — Cross Whitehall Briefing,” looks at three probable Brexit scenarios.
- Calculations suggest UK economic growth could fall by as much as 8 percent over a 15-year period, if Britain fails to strike a future trade deal with Brussels.
- In the best probable case, where Britain remains in the EU single market but as a non-member of the bloc, the decline would be 2 percent.
- If the UK was able to agree a comprehensive trade deal with the EU but remain outside the single market and customs union, growth would be 5 percent lower than current forecasts.
- New British trade deals with the US, China, India and other countries would boost growth, but not enough to make up for the lost EU revenue, according to the forecast.
- Almost every sector of the British economy, except for agriculture, would be negatively affected and London’s status as a financial center would be seriously eroded.
- The report is the latest to predict a major downturn in the British economy, when the country completes its divorce process.
Government won’t deny report: The Department for Exiting the European Union did not challenge the authenticity of the report but said it was not prepared to comment on its findings.
A department spokesperson said: “We have been clear that we are not prepared to provide a running commentary on any aspect of this ongoing internal work.”
Asked by Buzzfeed News why the report was not being made public, the source answered: “Because it’s embarrassing.”
But staunch euroskeptic MP Jacob Rees-Mogg, who campaigned for Britain to vote to leave the EU, dismissed the report’s findings as scaremongering, telling the BBC’s Newsnight program that similar predictions made prior to Brexit were “highly speculative” and “very inaccurate.”
Backed into a corner: The leak was published hours after ministers from the 27 other EU states endorsed the terms for the transition period between leaving and finalizing Britain’s new relationship with the bloc.
EU Ministers said the UK could keep its membership benefits for a further 21 months, but said the British government could not bloc or have input on new EU laws during the transition.
May’s future uncertain: Already severely weakened by the lack of a parliamentary majority following a snap election last year, British Prime Minister Theresa May is facing a new revolt from MPs within her ruling Conservatives, as bitter divisions over the possible roadmap to Brexit continue to dog the party.
Why its concerning: The report heightens the deep uncertainty that followed the June 2015 decision to leave the EU. In the months after, the British pound fell sharply against the dollar and euro, and while the UK economy grew 0.5 percent in the final three months of 2017, annual economic growth was at the weakest rate since 2012 at 1.8 percent.
London’s booming property market has dipped over the past 12 months and last October’s collapse of the fifth biggest airline, Monarch, together with the liquidation of outsourcing services group Carillion earlier this month, were both partly blamed on Brexit.
The report’s findings could strengthen the case for the softest possible Brexit or a second referendum on EU membership after negotiations with Brussels have concluded.