NIESR: GDP to be 4% lower in the longer term than it would have been had the UK stayed in the EU
A new NIESR report that came out yesterday estimates that if the government’s proposed Brexit deal is implemented, then GDP in the longer term will be around 4 per cent lower than it would have been had the UK stayed in the EU.
The report, ‘The Economic Effects of the Government’s proposed Brexit Deal’, focuses on how the government’s proposed Brexit deal is likely to affect the economy. Main points include:
- If the government’s proposed Brexit deal is implemented, then GDP in the longer term will be around 4 per cent lower than it would have been had the UK stayed in the EU. This is roughly equivalent to losing the annual output of Wales or the output of the financial services industry in London. This is equivalent to a loss of 3 per cent in GDP per head, worth around £1,000 per person per annum to people in the UK.
- If the UK were to stay in a customs union with the EU, or if the Irish backstop position was to be invoked, there would still be a hit to GDP per capita of 2 per cent.
- Even if the deal is implemented, there will continue to be uncertainty about the precise shape of the future relationship beyond the transition period ending on 31 December 2020. Recent estimates, based on the UK’s performance relative to other similar economies, suggest that Brexit uncertainty has already reduced UK GDP by about 2 per cent relative to what it would have been if the UK had stayed in the EU. This uncertainty is a consequence of the 2016 referendum result.
The estimates presented represent the Institute’s considered view of the economic impact of the government’s proposed Brexit deal, but they are themselves uncertain as there is no historical precedent of a country leaving a major trading block such as the EU.
Garry Young, Director of Macromodelling and Forecasting, said ‘Leaving the EU will make it more costly for the UK to trade with a large market on our doorstep and inevitably will have economic costs. We estimate the long-run cost of leaving the EU on the government’s preferred deal to be roughly equivalent to losing the annual output of Wales.’
Notes for editors:
The full report, ‘The Economic Effects of the Government’s proposed Brexit Deal’, can be found here.
This report has been prepared for the People’s Vote campaign by the National Institute of Economic and Social Research (NIESR) and been undertaken solely to provide public information.
The scenarios reported represent NIESR’s assessment of the economic effects of the UK’s withdrawal from the EU under the assumptions made.
NIESR is Britain’s longest established independent research institute, founded in 1938. It has no institutional position on how or whether the UK should exit the EU.
For further information or to arrange interviews, please contact the NIESR Press Office or Luca Pieri on 0207654 1931/ email@example.com
Latest News from
NIESR Monthly CPI Tracker – Change to Energy Price Caps Impacts Inflation14/11/2019 14:20:00
According to figures released yesterday by the ONS, consumer price index inflation decreased to 1.5 per cent in the year to October 2019.
£44.6 million of UK foreign aid budget used to export the nanny state overseas, finds new IEA report14/11/2019 13:35:00
IEA publishes "Nanny State on Tour"
The King's Fund responds to Labour’s pledge to boost health care funding14/11/2019 12:35:00
Richard Murray, Chief Executive of The King’s Fund, commented on Labour’s pledge to boost health care funding
IEA: Hiking taxes to fund the NHS “won’t sustain the institution”14/11/2019 11:35:00
Mark Littlewood responds to Labour general election announcement
Blueprint for radical reform of social care to end the crisis proposed by IPPR14/11/2019 10:35:00
Think tank sets out comprehensive plan including free personal care, ethical commissioning, enforced standards and good pay for care staff
Policy Exchange - Caring middle fear losing their homes for social care14/11/2019 09:35:00
64% are worried about the effect that losing their home and other assets would have on their family If they required care in later life
NIESR Monthly Wage Tracker – Uncertainty Taking Toll on Labour Market13/11/2019 12:05:00
According to new ONS statistics published yesterday, UK average weekly earnings (AWE) expanded by 3.6 per cent (excluding and including bonuses) in the three months to September compared to the year before.
NIESR: Monthly GDP Tracker – Output Stagnating After Mid-Year Rebound12/11/2019 11:05:00
The UK economy grew by 0.3 per cent in the third quarter of 2019 and is on course to grow by 0.2 per cent in the fourth quarter (figure 1). This would be consistent with GDP growth of 1.2 per cent in 2019, down slightly from 1.4 per cent in 2018.
IFG - New money will not be enough to raise public service standards11/11/2019 13:35:00
As the country prepares for the next prime minister, a new report finds that for the first time in years, the government may have pledged enough money to maintain standards in most public services. But more money will be needed to raise standards over the next five years.