A new phrase has slipped into the political lexicon which is used to deny a statement or report which contradicts the government’s own position: “we don’t recognise that…” No doubt, a similar phrase will be trotted out to counter the revelations in government document, leaked to “Buzzfeed” which suggests that the UK economy will be worse off under any leave scenario than if the country remains in the EU (hardly a surprise, but this appears to be a government paper rather than an “expert” opinion).
The analysis suggests that UK GDP could be between 2 and 8% lower if the UK leaves the EU – the Leave campaign promised that people would be better off outside the EU.
The leaked report, entitled “EU Exit Analysis” was written this month and examines three exit scenarios. It suggests that a comprehensive free trade agreement with the EU would lead to a 5% decline in GDP over 15 years. A “no deal” scenario, favoured by some hard-line Brexiteers would drop GDP by 8% in the same time period. The analysis suggests that the softest Brexit option under realistic consideration (although currently officially ruled out) of retaining Single Market and Customs Union membership by joining the European Economic Area would result in a 2% decline in GDP over the 15-year period.
The scenarios studied do not incorporate short-term costs to the economy such as costs of aligning businesses to any new customs arrangements. However, it is based on the assumption that the UK will be able to agree an FTA with the United States (which would be precluded if the UK remains in the Single Market or Customs Union) and be able to continue to benefit from many of the existing EU free trade agreements which it currently enjoys as a member (again, this will rely on the goodwill of the EU27).
The best that government damage limitation people could do was to point out that the analysis is based on existing exit scenarios and does not consider the government’s preferred option of a “deep, special, bespoke” relationship with the EU – probably for the very good reason that the EU has made it abundantly clear that it will not happen.