British government forecast predicts UK will suffer in every Brexit scenario

By Updated at 2018-01-30 18:34:42 +0000


A confidential report prepared for the British government and leaked on Monday suggests all UK industries will be hurt by leaving the European Union, Buzzfeed News reported.

The findings are the latest embarrassment for British Prime Minister Theresa May's government, which has faced renewed criticism from other EU leaders about the lack of a coherent Brexit strategy.

What the report says

• Buzzfeed News reported that the analysis, dated January 2018 and titled "EU Exit Analysis — Cross Whitehall Briefing," looks at three probable Brexit scenarios.

• Calculations suggest UK economic growth could fall by as much as 8 percent over a 15-year period, if Britain fails to strike a future trade deal with Brussels.

• In the best probable case, where Britain remains in the EU single market, but as a non-member of the bloc, the decline would be 2 percent.

• If the UK was able to agree a comprehensive trade deal with the EU, but remain outside the single market and customs union, growth would be 5 percent lower than current forecasts.

• New British trade deals with the US, China, India and other countries would boost growth, but not enough to make up for the lost EU revenue, according to the forecast.

• Almost every sector of the British economy, except for agriculture, would be negatively affected and London's status as a financial center would be seriously eroded.

• The report is the latest to predict a major downturn in the British economy when the country completes its divorce process.

British government won't deny report:

The Department for Exiting the European Union (DExEU) did not challenge the authenticity of the report, but said it was not prepared to comment on its findings.

Asked by Buzzfeed News why the report was not being made public, the source answered: "Because it's embarrassing."

Asked by DW, a UK government spokesman said: "We have already set out that the Government is undertaking a wide range of ongoing analysis in support of our EU exit negotiations and preparations."

"We have been clear that we are not prepared to provide a running commentary on any aspect of this ongoing internal work and that Ministers have a duty not to publish anything that could risk exposing our negotiation position," the spokesman wrote to DW.

By Tuesday, several British lawmakers called on the government to release its impact report. Chuka Umunna, Labour MP and chair of the Brexit watchdog group Leave Watch, accused the government of failing to protect the British people's interests by withholding the impact report.

The government, however, rebuffed calls for the report to be released. A spokesman for May said the report only offered a "partial" assessment that hadn't taken into consideration the government's preferred outcome of a bespoke future relationship with the EU.

In parliament, Brexit minister Steve Baker described the report was a "selective interpretation of a preliminary analysis" that had been leaked "to undermine our exit from the European Union." Baker also urged lawmakers to be cautious as many previous Brexit analyses had so far been proved wrong.

Backed into a corner:

The leak was published hours after ministers from the 27 other EU states endorsed the terms for the transition period between leaving and finalizing Britain's new relationship with the bloc.

EU ministers said the UK could keep its membership benefits for a further 21 months, but said the British government could not block or have input on new EU laws during the transition.

May's future uncertain:

Already severely weakened by the lack of a parliamentary majority following a snap election last year, Prime Minister Theresa May is facing a new revolt from MPs within her ruling Conservatives, as bitter divisions over the possible road map to Brexit continue to dog the party.

Why it's concerning:

The report heightens the deep uncertainty that followed the June 2016 decision to leave the EU. In the months after, the British pound fell sharply against the dollar and euro, and while the UK economy grew 0.5 percent in the final three months of 2017, annual economic growth was at the weakest rate since 2012 at 1.8 percent.

London's booming property market has dipped over the past 12 months and last October's collapse of the UK's fifth biggest airline, Monarch, together with the liquidation of outsourcing services group Carillion earlier this month, were both partly blamed on Brexit.

The report's findings could strengthen the case for the softest possible Brexit or a second referendum on EU membership after negotiations with Brussels have concluded.