Brexit could see a £54bn hit to the economy by 2030, depending on the type of deal struck in the next year, according to the first set of taxpayer-funded impact assessments.
The mayor of London Sadiq Khan commissioned a set of economic studies of the impact of different Brexit outcomes on regions and nine key sectors after Brexit Secretary David Davis said the Government had not done such work.
The scenarios assessed range from leaving the single market, the customs union, leaving both together and failing to get a transition deal, described by the study as “hard Brexit”.
The assessment, carried out by Cambridge Econometrics, says economic output across the UK could be on average between 3% lower by 2030 than it would if Britain were to remain within the single market and customs union. The hit to London is calculated at 2%.
Mr Khan said: “This independent analysis should help guide the Government to the best outcome for London and the UK.
“If the Government continue to mishandle the negotiations we could be heading for a lost decade of lower growth and lower employment.
Image: Sadiq Khan said the Government’s ‘lack of preparation is irresponsible’
“The analysis concludes that the harder the Brexit we end up with, the bigger the potential impact on jobs, growth and living standards.
“Ministers are fast running out of time to turn the negotiations around. A ‘no deal’ hard Brexit is still a very real risk – the worst possible scenarios.”
The impact assessments could infuriate the Government, which has insisted such information could undermine negotiations. It has both refused to release such information and also suggested that such analysis does not exist.
Mr Khan justified the move, saying: “It’s astonishing that the Government has failed to do any proper impact assessments on what Brexit could mean for our economy.
“Their complete lack of preparation is irresponsible leading to fears that they are putting party politics ahead of the national interest.
“I’ve released these impact assessments because the British people and our businesses have a right to know the likely impact of the various options the government are considering on their lives and personal finances.
“This new analysis shows why the Government should now change its approach and negotiate a deal that enables us to remain in both the single market and the customs union.”
Image: David Davis has said the Government has not done impact studies
Last month the Government was obliged to release some Brexit sectoral analyses after losing a binding vote in the Commons.
The Treasury is believed to have carried out similar calculations, but it is unclear even if the Cabinet sub-committee responsible for overseeing negotiations have been shown them.
Some Cabinet ministers involved in the Leave campaign are known to dismiss such studies as “Project Fear”.
Mr Khan’s study indicates a serious hit to the economy in the event of a significant break with the customs union and single market.
But the hit is notably smaller than predicted before the referendum by the Treasury, which forecast a “hard Brexit” hit to the economy of 7.5% by 2030, compared to 3% in Mr Khan’s study.
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The calculations are in line with assessments done before the referendum by the IMF and the National institute of Economic and Social Research.
Already economists suggest that during 2017 the economy had grown about 1% more slowly, falling to the bottom of the G7 and major EU league table, after the impact on prices of the post-referendum slide in sterling.
However, the recession predicted during the referendum has not yet materialised.
This analysis suggests 500,000 jobs are under threat from a “no deal” Brexit by 2030, including 87,000 in London.
Financial and professional services would be the “worst affected key sector” with up to 119,000 fewer jobs nationally, the report says.
There could be 92,000 fewer jobs in science and technology, and 43,000 fewer jobs in construction.
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Both the London mayor and Cambridge Econometrics admit that this analysis is not a precise forecast of what will happen.
They argue the report “highlights the scale of the comparative risks associated with each scenario and potential outcome from the negotiations”.
Source: SKY News