It will be bad with a Brexit deal. It will be worse with no deal at all.
Brexit is going to be bad for Britain’s economy — no matter what.
A new UK government report released on Wednesday concluded that the economy will be worse off in the next fifteen years after Brexit, compared to a scenario where the United Kingdom remained part of the European Union.
The government report predicts that Britain’s economy will be 3.9 percent smaller under a Brexit withdrawal agreement, with net migration from the EU at zero. But a no-deal Brexit — meaning the UK leaves the EU without any transition plan on March 29, 2019 — would make the economy whopping 9.3 percent lower in 15 years than if the UK and EU had never broken up.
The Bank of England issued its own report on Wednesday, and gave another less-than-rosy analysis of a no-deal Brexit. It warned that it could cause the worst economic downturn since the Great Recession a decade ago.
The UK and the EU have been integrated for four decades, so leaving the bloc was always going to be unpredictable and complicated, no matter how it happened. But these projections put the coming impact of Brexit into stark relief.
These are, of course, just estimates, and the analysis was made based on an earlier “soft” Brexit plan May had presented over the summer called the “Chequers” deal, which the EU rejected. But these latest figures are still likely to intensify the current Brexit debate in Britain, especially as the UK Parliament gears up for a vote on May’s Brexit deal around December 11.
Everyone will see what they want to see in these latest estimates
All sides of the fractured Brexit debate are now trying to spin or discredit the findings to support their positions.
May and her government will likely use its own report to persuade anxious members of Parliament to support her unpopular Brexit deal. May is facing a serious revolt from hardcore Brexiteers within her own Conservative party who see this agreement as a Brexit in name only, and a deal that will keep the UK tied to the EU and its rules long after they break up.
May has been trying to make the case to Conservative members of Parliament — and to some members of the opposition Labour Party — that it’s this Brexit deal or no deal at all, and the latest analysis does show that some sort of plan will likely mitigate the economic pain.
Chancellor of the Exchequer Philip Hammond (the UK’s fancy title for a Finance or Treasury minister) argued something similar, basically saying that all versions of Brexit are not great, but the economic costs wouldn’t be as dramatic under May’s plan.
“Becoming a fully independent country and trading as an independent country with the European Union introduces some level of friction in our trade,” he said Wednesday about the government’s analysis. “Our commitment is to absolutely minimize that friction and we have got our European neighbors to agree, in this deal, that we will work together to do that.”
Of course, asking members of Parliament to pick the lesser of two bad options isn’t the most compelling of arguments. And that will likely give ammunition to opponents of the deal — including pro-Remain Conservatives and some members of the Labour party — who are pushing for a second referendum to give the public another opportunity to rethink Brexit altogether. (May has opposed a second referendum, and would likely require the EU to agree to extend the Brexit deadline from March 29, 2019.)
As for the pro-Brexit crowd: they’re questioning the accuracy of the research. David Davis, May’s former Brexit secretary who quit in protest in July over the prime minister’s approach to Brexit, said the numbers were based on “flawed assumptions,” according to the BBC.
But the latest numbers expose at least some of the ruse of the Brexiteers and their “Leave” campaign, which promised voters ahead of the June 2016 referendum that being free from the rules of the European Union would be an economic boon, and allow Britain to make its own trade deals.
Even if the analysis is imperfect, the short and medium-term outlook suggests it’s going to cost the United Kingdom’s economy.
Anand Menon, a researcher at an independent Brexit think tank, told me earlier this week that people have long argued that the economic pain of Brexit, including a no-deal Brexit, wouldn’t be as bad as some claim.
“There are proponents of chaos on both sides of the divide — on the far left and the far right,” he said. “They think that the UK leaving the EU with no Brexit deal will create the chaos necessary for the kind of radical reform this country needs.”
“It’s not a very easy thing to say out loud, so they don’t tend to say it out loud,” he added. “They tend to say, ‘It will be fine, don’t worry about it.’”