The National Institute of Economic and Social Research (NIESR) issued a stark warning last week if the UK government was to continue to follow its official plan for the post-Brexit economy. In the NIESR’s first major assessment of the economic impact the government’s white paper would have on the economy, it calculates that UK GDP would be 2.5% smaller over the next 10 years if the UK’s preferred relationship with the EU is achieved. With the government prioritising trade and services, while bringing back control of budgetary contributions and immigration, the NIESR believes it will have to make ‘significant concessions’ to the EU.
In a press release the NIESR stated -
As before, the central forecast has been conditioned on a ‘soft’ Brexit assumption where the UK achieves close to full access to the EU market for goods and services. If instead of this soft Brexit scenario we assume that the government achieves the somewhat more restrictive White Paper proposals, the output loss will amount to £500 per person per year over time compared with the soft Brexit scenario. The loss would be around £800 under a ‘no deal’ Brexit. These estimates do not include the likely impact on productivity which could, on some estimates, double the size of the losses.
To add to Prime Minister Theresa May’s woes some of her ministers are warning that Brexit talks risk ending in complete failure, with International Trade Secretary Liam Fox on Sunday predicting a messy split from the European Union blaming ‘an inflexible European Commission‘. Fox said there’s now a 60 percent likelihood of a no-deal outcome to Britain’s scheduled exit next March. It follows a warning last week by Foreign Secretary Jeremy Hunt that “we potentially face the prospect of a no-deal by accident,” and comes as the government steps up no-deal preparations.
In an interview with the Sunday Times, Fox warned ‘The intransigence of the commission is pushing us towards a no deal’ adding ‘We have set out the basis in which a deal can happen, but if the EU decides that the theological obsession of the unelected is to take priority over the economic well-being of the people of Europe, then it’s a bureaucrats Brexit -- not a people’s Brexit’ believing ‘there is only going to be one outcome’.