The British government’s Brexit deal would cost the country 100 billion British pounds (about 128 billion U.S. dollars) per year by 2030, according to media reports on a research institute’s latest estimates.
The report, produced by the National Institute of Economic and Social Research (NIESR) and commissioned by the People’s Vote campaign, modeled different Brexit scenarios against a baseline of staying in the EU, the BBC reported early Monday. “Our key finding is that if the governments proposed Brexit deal is implemented so that the UK leaves the EU customs union and single market in 2021, then by 2030 GDP will be around 4 per cent lower than it would have been had the UK stayed in the EU,” NIESR noted in the report, according to British pro-am newspaper The New European. “This is equivalent of losing the economic output of Wales or the City of London,” BBC said, quoting the report.
GDP per head would fall by 3 percent a year, amounting to an average cost per person a year of 1,090 pounds at today’s prices, NIESR added. “This is largely because higher impediments to services trade make it less attractive to sell services from the UK. This discourages investment in the UK and ultimately means that UK workers are less productive than they would have been if the UK had stayed in the EU,” NIESR commented on the findings of its report. Total trade between Britain and the EU would fall by 46 per cent, BBC quoted the report’s figures. In addition, foreign direct investment would fall by 21 percent, while tax revenue would drop 1.5-2 per cent.
The report also modeled alternative Brexit outcomes against staying in the EU. This showed that remaining in a customs union beyond the transition period, possibly through invoking the so-called Irish “backstop”, would still mean a hit of 70 billion pounds a year. Another scenario, favored by some Brexit supporters, of an “orderly no deal” departure from the EU would reduce GDP by 5.5 percent, or 140 billion pounds a year, it said. Leaders of EU member states on Sunday endorsed the Brexit deal at a summit in Brussels, a major breakthrough since the lengthy Brexit negotiations started in March 2017.
The stage is set for Britain to end its EU membership on March 29, 2019 and enter a transition period until the end of 2020. Prime Minister Theresa May will now need to persuade Members of Parliament to back her deal, but some think she will struggle to get it through.