Brexit starts to look very, very scary

Leave voting areas of the UK are amongst the worst hit in the Government’s own analysis of the impact of Brexit.

Staying in the single market, which the Government refuses to do, would see a 3% fall in GDP in the North East. That is best case scenario. If we crash out with no deal, that hard-hit area of the country stands to lose 16% of GDP.

Similarly in the West Midlands, no deal amounts to a 13% fall in GDP.

Here’s the full analysis:

Tom Brake said:

This is a damning outlook for Britain. The Tories are putting everything on the line because they do not care about the lives and livelihoods of the people of the UK.

The government need to start being clear what they are fighting for. They are still keeping no deal on the table despite how crippling it would be to the regional economy.

People did not vote to make themselves poorer.  They should be allowed a vote on the final deal and a chance to exit from Brexit.

Willie Rennie looked at the impact on Scotland and across the UK and accused the Conservatives of putting the public in the firing line;

The Government’s own research is now showing that Brexit will be an economic disaster for every part of the UK. We need to stop Brexit before it is too late.

The Conservatives are putting the public in the firing line because they are hell bent on Brexit.

People did not vote to make themselves poorer and should have the right to reject a bad deal on Brexit.

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26 Comments

  • So to be clear even if we EXIT from BREXIT we are going to be worse off and see a fall of GDP of 2% for the whole of the UK over the next 15 years
    (If our membership of the EU is that wonderful why are we seeing our GDP shrink if we stay???)
    And it is claimed, each scenario in which we leave, makes us that little bit more worse off

    These are all claims of extra costs it will cost us to trade with the EU,
    But what about the trade deals we strike with the rest of the world? Those figures seem to be being ignored in this analysis, so how can that be a fair representation of the facts of what will happen to the UK economy

    “The Guardian has learned that the secret papers, which assess the economic impact of leaving the bloc, predict that if there is no deal, the government will need to borrow £120bn more over the next 15 years The additional borrowing costs would be mitigated by £40bn of gains from leaving the EU, including £11bn in saved payments, leaving £80bn in net costs. Of this, £55bn can be put down to the impact of non-tariff barriers, which could include regulatory divergence or quotas.”
    £80 Billion over 15 years makes 5.3 Billion a year in my book, which can easily be made up in new trade deals with the rest of the world.

  • Paul Kennedy 7th Feb '18 - 11:30pm

    matt – the figures show we will be 2% worse off if we leave the EU even if we stay in the single market (European Economic Area) which is not the same thing as staying in the EU – we already have lots of deals with other countries by virtue of our membership of the EU so the new deals you talk of will bring us very little extra and could be worse than we currently enjoy

  • Matt –
    The reality is that there will be some drop in our GDP even if we exit from Brexit because of an unwillingness of large parts of industry in the UK to make the investments they would otherwise have made. Large parts of industry located in the UK are owned by foreign companies (think the car industry where there are NO significant UK owned companies) and even if we stay in the EU (easily the best scenario) we will be regarded as unreliable. Companies will take much of their investment elsewhere and our industry will decline, and that is before the 20% increase in costs reported to be coming down the track if we leave.
    The rest of the world thinks we are plain bonkers to leave, and regards us as increasingly irrelevant. The shiny new trade deals promised by the Brexiteers are just fantasy and lies. The serious players are putting us at the back of the queue where we will get bad deals for what little is left of our economy ten years from now.

  • @Paul Kennedy
    “o the new deals you talk of will bring us very little extra and could be worse than we currently enjoy”

    I highly doubt that. If the worse case scenario is the UK has to make up 5.3 Billion a year in trade deal with the rest of the world and there is a very big world out there with a lot of emerging economies…..to account for any extra trading costs we may meet with the EU, Then I am more than confident that the UK can do this and will thrive..where do we sign….

    @Rob Renold “The rest of the world thinks we are plain bonkers to leave, and regards us as increasingly irrelevant. ” Come on Rob, please show me a quote from one head of state outside of the EU, that has said that about the UK

  • Lorenzo Cherin 8th Feb '18 - 12:05am

    Scary is not met sensibly with scaremongering.

    We are in the EU and I cannot get a loan or any help or investment from any bank. Not now nor for five years of trying, despite chasing my tail work wise and offering real examples of progress and potential for my project.

    I am scared . I lost my house . I could become someone who loses my home. I do not own it. I know what scary is as my own partner and I were minding our own business walking on the pavement years ago and a car lost control and mounted it and nearly killed us, injuring her physically and both of us emotionally and financially and professionally.

    Get a bit of perspective . Brexit is lousy. There is a better headline.

  • James Hammerton 8th Feb '18 - 12:38am

    This article and some of the comments suggest that the analysis is projecting a fall in GDP over the next 15 years of between 2% and 8% depending on the Brexit scenarios considered, with larger falls suggested for several regions.

    However, as both the original Buzzfeed article (https://www.buzzfeed.com/albertonardelli/the-governments-own-brexit-analysis-says-the-uk-will-be?utm_term=.naEPP5Q1#.oua226rv) and this more recent BBC report (http://www.bbc.co.uk/news/uk-politics-42977967) make clear, the UK’s GDP *growth* is projected to be lower by between 2% and 8% less over the next 15 years than if we’d stayed in the EU.

    Likewise the GDP *growth* of each of the regions is projected to be lower by varying amounts (16% less growth in the worst case for the North East) during this period.

    Don’t get me wrong, if the economy grows more slowly than it could have done, that’s not a good thing, but that is quite different from projecting a 15 year long contraction!

  • Paul Reynolds 8th Feb '18 - 8:02am

    Curious. Why do many leading Brexiters think the UK will get better trade deals negotiating as a market of 60m people relative to the EU negotiating as a market which is many many times larger ? The UK had an early initial go at negotiating on its own with India for example. India immediately demanded easier visa access and a host of other things, so the outcomes of this earlier attempt was quietly locked in the bottom desk drawer as something inconvenient to be ignored. In the USA, Congress controls trade policy. It doesn’t take much research to establish their list of demands and they go way beyond lowering our food standards. It is blindingly obvious that these new trade deals will be damaging to the UK economy rather than miraculously compensating for the economic losses of leaving the EU. Maybe there are other ways that might compensate for economic losses of leaving the EU but I can’t help remembering the Leave campaigns telling us there weren’t going to be any losses in the first place.

  • Peter Martin 8th Feb '18 - 8:08am

    The Government’s track record on economic forecasting isn’t too accurate to say the least. Does anyone remember all those projections about how the Government would be “back in surplus” over the period of a single Parliamemt starting with 2010 to 2015? Then 2015 to 2020? This was never going to happen and everyone, with the possible exception of the forecasters, knew that.

    The answer you get depends on the model you use. It depends on any assumptions made about growth in the world economy and, in particular, growth in the EU economy. That’s still going to be a big factor whether we’re in or out of the EU. Even with the right models, the saying GIGO (Garbage in Garbage Out) still applies.

  • Arnold Kiel 8th Feb '18 - 8:12am

    Brexit was always very very scary to anybody with an open eye. It starts looking that way to more of us, because even the best organized wall of lies cannot withstand a constant flow of facts.

    The terms “scaremongering” and “project fear” (none of which existed in reality) are part of an effective dishonest leave-propaganda (in terms of the economy the only element), and should not be treated as reasonable concerns.

    The quoted mid-case numbers, btw., are based on an EU trade-deal being achieved, all EU-third-party trade deals being replicated, and major deals with the US and some other non-EU countries being concluded (thereby demonstrating their irrelevance), none of which this incompetent and dysfunctional Government is likely to achieve anytime soon.

  • @Paul. It’s a mixture of arrogance and wishful thinking. There are some people who really do think that us Brits are so marvellous compared to the lazy French and humourless Germans that being in an alliance with them is holding us back.

    Then of course there are those who think that pesky employment, health & safety and environmental regulations are eating into their profits. Not forgetting all those ever tightening rules about paying the tax you owe.

    I agree that some reporting confuses the prediction that those % differences are relative to what we would have been if we’d voted Remain, rather than absolute values. In some cases I think this is deliberate mis-reporting so that the figures can then be rubbished.

  • Paul Reynolds 8th Feb '18 - 9:07am

    Funny how every little morsel of vaguely positive economic prognosis post-Brexit is bigged up by the Daily Mail and leading Brexiters but every negative prognosis leads to the rubbishing of all such prognoses, and a dig at ‘elite experts’ to boot. What might one conclude from this I wonder ?

  • The article assumes the car industry will tank e.g. the trope about the North East losing out by RenaultNissan moving out of Sunderland and becoming an even bigger net importer of cars than it already is.

    It’s true they threatened that before the referendum but the reality is they are expanding to cover more UK demand and also bringing more of their supply chain to the UK – in other words become less of a net importer than at the present.

    Brexit isn’t a reason why cross-channel trade will increase and models that show us driving more EU built cars rather than UK-built ones are based on faulty assumptions. Models that show us driving more Nissans and fewer Renaults are the right ones to look at and the ones which seem to match what’s actually happening on the ground.

  • @Barnaby
    Agreed
    Seems as if the remainers have not learnt the lessons of the past and are going to rely on exactly the same baseless scaremongering tactics that were rejected and failed miserably the last time round.

    @Arnold

    “and major deals with the US and some other non-EU countries being concluded (thereby demonstrating their irrelevance)”

    Where does it say that in the report? And how on earth could they know the value of trade deal that is negotiated with say, China, Brazil, USA and Australia, before it is even negotiated. If it is true to say they factored these into there forecasts, then it is even more legit to say these forecasts are not worth the paper they have been writing on and complete nonsense

    @Paul Reynolds
    “Funny how every little morsel of vaguely positive economic prognosis post-Brexit is bigged up”
    Thats because it is reporting on facts that have happened in the last quarter, GDP UP, Employment up, Manufacturing up etc, it is reacting to facts that have HAPPENED, it is vastly different to the forecasts 1-2-5-10-15 years ahead which as we know, they are not even able to get 12 month forecasts right

  • I think we need to insert a bit of balance in this debate.
    Firstly the forecast figures are for a variance from projections for the economy against if we had remained in the EU. They are not for a contraction per se. I think the most you can say is that there is an ‘increased risk’ to the economies of the areas as detailed. This would seem to reflect Prof Minford’s prognosis of a contraction of manufacturing balanced against an increase in service based trade. I would also note that GDP in and of itself is not a totem. GDP can be increased purely on the back of increased immigration and decreased on restriction of same. GDP per capita may be a useful figure to measure on side of these figures. It is important to consider that trade deals are socioeconomic agreements and you cannot talk about them without assessing the social cost to individual sectors of our society. I can see the argument for Brexit. I reject it on a holistic basis. Is the EU great? No. It needs reform. Can it be a force for social good and prosperity? Yes. IMO, It is where we need to be for the future of our country. Not because we will be better or worse of, but as a social choice. Unity and cooperation verses competition and conflict.

  • Arnold Kiel 8th Feb '18 - 1:54pm

    https://www.buzzfeed.com/albertonardelli/the-governments-own-brexit-analysis-says-the-uk-will-be?utm_term=.aclYNBAmxJ#.xi04Kw9d1P

    “• On the plus side, the analysis assumes in all scenarios that a trade deal with the US will be concluded, and that it would benefit GDP by about 0.2% in the long term. Trade deals with other non-EU countries and blocs, such as China, India, Australia, the Gulf countries, and the nations of Southeast Asia would add, in total, a further 0.1% to 0.4% to GDP over the long term.”

    ROW “trade deals” are beneficial, if they result in the UK selling more of the goods and services it makes to these areas than today. The potential is limited: rich Americans, Russians, and Chinese already drive all the Jags, Rolls, Bentleys, and Ranges they want, hide most of their stolen wealth (excl. Americans who can’t) in London and associated tax havens, and own London prime real estate. What else is there on offer? Inversly, importing tariff-free will make some things cheaper at the expense of domestic employment, esp. agriculture, and create origin-problems in EU-trade.

  • Curious. Why do many leading Brexiters think the UK will get better trade deals negotiating as a market of 60m people relative to the EU negotiating as a market which is many many times larger ?

    I’m curious why so little has been made of the recent trade deals with China, as they provide a very timely opportunity to expose the lies of Brexit! It is noteworthy that no Brexiteer has commented about the impact of the UK’s EU membership on the negotiations, given here is a golden opportunity to illustrate just how the EU constrains the UK and that without the EU the UK could have achieved a different and better result. The fact that Brexiteers have been silent amply gives the lie to the idea that after Brexit the UK could negotiate better deals.

    I am therefore concerned that those opposing Brexit haven’t used the Chinese negotiations as leverage to expose a Brexit lie…

  • Peter Martin 8th Feb '18 - 3:50pm

    It’s scary which ever way we go. Most remainers have an idea of the EU which is largely based on the old EEC.

    The EEC worked very well. European countries traded with each other with few problems. All countries having their own currencies was a big advantage. If they needed to be adjusted in value to suit their position in a changing world they could be adjusted. If anyone doubts the wisdom of floating currencies, ask the Canadians why they don’t use the US dollar. Or why they don’t peg their dollar to it?

    The Maastricht and Lisbon changed all that. But if the EEC wasn’t broke why did it need fixing? The EU that has followed can only be a stepping stone to a U.S.E. How scary is being a part of that going to be?

  • “Inversly, importing tariff-free will make some things cheaper at the expense of domestic employment”

    But, whose domestic employment?

    China produces a great deal of equipment in the solar, energy recovery and associated control systems industry. Problem is, so do Spain, Germany and Italy
    As a result of our EU membership we are forced to put import tariffs on cheaper Chinese solar panels, such that solar installations on British homes are probably 25% more expensive than they could be, simply to protect the German and Spanish solar panel industries.

    So not only are we the 2nd biggest contributor to the EU, our citizens are also overpaying on ‘stuff’ to subsidize industries in 27 other EU countries.

    And don’t get me started on CAP, and how its French farmer protectionism blatantly rubs the noses of African agriculture into the dust, in order to keep food prices higher than is necessary?

  • Peter Martin 8th Feb '18 - 4:19pm

    @ Arnold Kiel,

    Tariffs don’t work in the way you might think. They are just as much a burden to the country imposing them as they are to countries whose exports are affected by them. See link to Lerner’s symmetry theorem as below.

    The customs union is a high tariff zone. We don’t need high tariffs. The Liberal Party was, historically, always the party of free trade in a global sense and not just a so-called free trade behind a tariff wall.The EU way.

    So traditionally the Liberals always understood what present day Lib Dems don’t.

    https://en.wikipedia.org/wiki/Lerner_symmetry_theorem

  • Wales and Scotland aren’t “government regions”, they are countries.

    Does it matter? On last night’s question time one contributor from the audience described brexit as England wanting to make its own decisions. While correct herself, this slip (and May’s statements on brexit) show it’s more about England than it is the UK.

  • Arnold Kiel 9th Feb '18 - 9:00am

    Of course, import tariffs are protection(ist). Are you sure most leavers are happy to be jobless, consumers of the world’s cheapest products? I don’t suppose you want to introduce Vietnamese working hours, Bangladeshi wages, Phillipine work-safety, American-style farming, or Chinese energy generation. So you need to protect them from their lack of global competitiveness in one way or another: in or out of work. I prefer the former.

  • @Arnold

    “American-style farming,”
    The EU already has American style farming
    in the UK alone we have 789 mega farms meeting the definition of CAFO (Concentrated Animal Feeding Operation). The EU is full of them with intensive poultry farming.

    Here we criticise the US for using Chlorine, but it seems as though we are perfectly happy to pump out livestock and their feed with antibiotics which is far more damaging to human health.
    But Protectionist EU policies say we must criticise other countries practices and ban their exports, even though our own are far more damaging to the environment and human health

  • @Shelia Gee “China produces a great deal of equipment in the solar, energy recovery and associated control systems industry. Problem is, so do Spain, Germany and Italy”

    So I take it that you and other Brexiteers, are happy to trash the small but growing UK solar panel manufacturing industry (along with the control systems industry and others), as clearly we don’t need our own solar manufacturing industry, just as we don’t need a UK steel industry contributing to a global overcapacity. The problem which the steel industry exemplifies, is that the UK industry is less than 1% the size of the Chinese industry, hence there very few essentials we can produce here, which cannot be more cheaply produced in China.

    As for the effective EU import ban on Chinese solar panels, this was imposed because the Chinese government has massively subsidised production and encouraged sale at below production cost, ie. dumped.

    For Brexit to deliver on its promises, we will need to protect (and invest in) segments of our economy, the challenge will be deciding which one’s.

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