The Release of Government's EU Exit Analysis
The EU free trade agreements still expected to cost the UK by 4.8 percent of its projected economic growth for the next 15 years, based on the confidential government ‘EU exit analysis’ released yesterday. The decline in growth amounted to £55 billion of the British government debt by 2033, which could further negate the expected ‘Brexit dividend’ by the supporters of the EU exit. The report was issued by the department of Exiting the EU committee. Moreover, Brexit Secretary David Davis stated that the published document should be kept confidential but some parts of the material were already leaked to the media last month.
The alternative option led by Theresa May’s team is the “Membership of the single market” but was ruled out due to the possible drop in GDP by 1.6 percent. On one hand, the ‘no deal’ Brexit would return the UK trading with the EU-27 under the standards of the World Trade Organisation and would cost 7.7 percent of the GDP based on the government numbers. This could result in a surge of government borrowing by £20 billion and £80 billion, respectively. With this, there are assumptions that approximately 40,000 to 90,000 EU migrants are planning to leave the United Kingdom.
Included in the analysis is the projected economic benefits from the reducing regulations. The government of Britain would likely create its original version of impact assessment, however, some of the think tanks are expected to see potential gains around zero and 2 percent only of the GDP. Nevertheless, the report does not mainly evaluate the short-term economic effect of Brexit.
It further shows that the free trade deal with the United States would benefit the UK GDP by 0.2 percent in the longer term. While another concession with countries under the trans-Pacific and south-east Asia regional group such as Australia, China, India and New Zealand is expected to add 0.1 to 0.4 percent of GDP. Ministers of Britain are hoping to start the talks prior to the Brexit scheduled in March 2019, but this plan seems to be already abandoned.