Brexit is going to make Britain worse off, according to an official report leaked to Buzzfeed News.
The report looked at the three most likely scenarios when Britain departs the European Union, and concluded that in each one the UK will become poorer.
The impact assessment also claimed that every region — and almost every sector — would be negatively hit.
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Buzzfeed News reported that key ministers were secretly presented with the findings this week, ahead of a meeting next week with the Brexit cabinet subcommittee. A source from the Department for Exiting the European Union (DExEU) reportedly told Buzzfeed News that its conclusions weren’t shared publicly “because it's embarrassing.”
The report, called “EU Exit Analysis — Cross Whitehall Briefing”, examined the next 15 years and modelled each scenario, calculating the hit to growth in comparison to current forecasts.
It assumes that a trade deal with the US will exist across all scenarios, increasing GDP by 0.2% over the long term. However, all supposed benefits — including trade deals with other non-EU countries and deregulation across employment law, product standards, and the environment — would struggle to mitigate the losses from leaving the customs union and the single mark, says the report.
These were the three models on the table:
No deal
Means: The UK does not complete a deal with the EU, and reverts to World Trade Organisation (WTO) rules.
Growth lost: 8%
Comprehensive trade deal
Means: The UK successfully negotiates a new arrangement with the EU outside the single market — and successfully negotiates with non-EU countries as a result.
Growth lost: 5%
Continued single market access
Means: Britain continues to trade with the EU in the single market as a member of the European Economic Area.
Growth lost: 2%
Across every modelled scenario, the report found that almost every sector of the economy would be hit hard — excluding agriculture if WTO rules were adopted. Every single region would also suffer economically, with a real risk that London’s finance community could be “severely eroded”.
The main driver for the economic hit under all modelled scenarios are non tariff barriers - EEA or FTAs with the US and others, and divergence, would mitigate but not eliminate the negative impact of leaving the customs union
— Alberto Nardelli (@AlbertoNardelli) January 29, 2018
The analysis shines a light on the core of May's challenge: possibility of mitigating the damage of Brexit is in regulatory divergence and FTAs, but the more the UK diverges the greater the barriers with its biggest market and the economic hit
— Alberto Nardelli (@AlbertoNardelli) January 29, 2018
However, ministers have played down the report — with Brexit minister Steve Baker saying the draft paper “requires further work”, is nowhere near ministerial approval, and “does not yet take account of the opportunities of leaving the EU.”
“The article is a selective interpretation of a preliminary analysis,” Baker told the House of Commons. “It is an attempt to undermine our exit from the European Union.”
Conservative MP Iain Duncan Smith earlier said that the report should be taken "with a pinch of salt" on BBC Radio 4's Today programme — arguing that every Brexit forecast in existence had been wrong so far.
Leaked #Brexit analysis "is an attempt to undermine our exit from the European Union", says minister Steve Baker https://t.co/bNWvuTbUhIpic.twitter.com/x1FPR9W8Zv
— BBC News (UK) (@BBCNews) January 30, 2018
There is now building pressure from every major political party for the government to publish the report. A spokesperson for the Prime Minister said the she had briefed the cabinet on the leak this morning.
“No analysis was made of the bespoke arrangement we seek as a matter of government policy, as set out in the Florence speech,” the spokesperson said.
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