Car and drug industries worst-hit under no-deal Brexit, says Treasury
Government analysis has modelled the likely economic impact of leaving the EU under a range of different scenarios.
Thursday 29 November 2018 06:01, UK
We will all be poorer after Brexit. Just how much poorer depends on the deal we get.
That's the view of the Government's own analysis of a range of different scenarios, ranging from the frictionless trade model backed by Theresa May, through to her Chequers model, and then on to a no-deal Brexit that sees Britain do business on the terms of the World Trade Organisation.
The analysis has been drawn up by a cross-government group, including the Foreign Office, Department for Exiting the EU, Home Office and the departments for business and international trade.
In every scenario, Britain's economy is predicted to grow over the coming 15 years, but not as fast as it would have done without Brexit.
However there is no specific analysis of the withdrawal agreement that Mrs May is trying to push through Parliament.
On the basis that free movement would end under her plan, the closest predictions that you can use from this analysis appear to suggest that her plan would lead to a reduction in growth of between 2.5% and 3.9%.
The overall analysis predicts that, under the no-deal scenario, growth would be up to 10.7% less.
That most extreme prediction is based on a model Brexit with strict restrictions on European workers coming into the United Kingdom.
A no-deal scenario would hit two sectors particularly hard, according to this report.
The pharmaceutical and automotive industries are both estimated to see a hit of more than 20% to their growth over 15 years - whereas it is suggested that both sectors would be barely affected under the terms of the most optimistic prediction.
The worst affected area would be the north east of England, a result of the hit to manufacturing.
The most optimistic prediction involves the government's preferred plan, as set out in its white paper in July, with tariff-free access to Europe.
That model also assumes no changes to migration, and would see the economy be 0.6% smaller in 2034 than it would otherwise have been.
The Irish backstop has, however, not been included in any of the pieces of analysis.
And the authors of the report accept that, when making predictions for 15 years in the future, changes to technology, demographics and the wider economy are almost impossible to predict.