28 January 2020

The Independent: Brexit uncertainty could cost UK economy £15bn by end of decade, report finds

Continued uncertainty over Britain’s future trading relationship with the EU could cost the UK economy £4.4bn annually by the end of this year and £15bn by the end of the decade, a new report has warned.

Despite Boris Johnson’s claim to be “getting Brexit done” the report by international think tank Rand Europe found that the UK’s formal departure from the EU on Friday will “only end the first phase of trade uncertainty” caused by Brexit.

And the paper gave short dismissal to the prime minister’s promise to conclude negotiations on a Canada-style free trade agreement by the end of a so-called “transition period” on 31 December, warning that talks “may take considerable time” as the UK comes to terms with the “negative long-term economic implications” of a swift deal.

Damage to the UK economy will carry on accelerating until details of the new arrangements are finally settled, with GDP growth potentially reduced by £11bn by 2025 and £15bn by 2029 unless a new deal is reached.

The report warned that any decline in GDP will feed through into higher government borrowing, at an additional cost in annual interest payments of almost £1.3bn by the end of 2020 and £3bn by 2025.

The report warned that the PM will have a difficult judgment to make on the balance of costs to the UK between cutting talks short or allowing them to continue too long.

“The UK will need to weigh up the potential short-term economic implications of prolonged trade policy uncertainty if negotiations last beyond 31 December 2020, versus the potential negative long-term economic implications of an agreement that is made quickly but lacks the comprehensiveness required for a broad and deep future UK-EU trading relationship,” it said.

“Britain’s allies, especially the US, will also be concerned by any prolonged period of uncertainty about the UK’s security and defence relationships with its neighbours. [...]

Full article on The Independent

Rand report: The End of the Beginning. Assessing the potential economic implications of prolonged UK–EU trade policy uncertainty

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