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Britain’s Economy Will Be Worse Off After EU Divorce

If there is no deal and Britain resorts  to WTO terms, growth will fall 8%.If there is no deal and Britain resorts  to WTO terms, growth will fall 8%.

A forecast prepared for the British government reportedly says the economy will be worse off after the country leaves the European Union whatever trade deal is struck with the bloc.

The leaked assessment published Monday by news website BuzzFeed says if Britain reaches a free trade deal with the EU, growth will be 5% lower than current forecasts over 15 years, AP reported.

The document, dated this month, says if there is no deal and Britain resorts to World Trade Organization terms, growth will fall 8%. If Britain remains in the EU single market but as a non-bloc member, the decline will be 2%.

Britain’s government maintains the country will be able to strike new trade deals around the world after Brexit to replace any decline with the EU.

The leaked analysis says new trade deals with the US, China, India and other countries would boost growth, but not enough to make up for the lost revenue from the EU, currently Britain’s biggest trading partner.

The report is the latest in a string of economists’ predictions that leaving the EU will harm the UK economy. Supporters of Brexit point out that many such forecasts have so far not come to pass.

The document is likely to further inflame feuding within Britain’s Conservative government, between those who back a clean break with the bloc and those who want to keep Britain’s economy as closely aligned with the EU’s as possible after Brexit in March 2019.

According to Buzzfeed, the leaked document, titled EU Exit Analysis - Cross Whitehall Briefing and drawn up for the Department for Exiting the EU, suggests almost every part of the economy would suffer, BBC said.

But Conservative MP and leave campaigner Iain Duncan Smith told the Today program the paper should be taken “with a pinch of salt” as almost every single forecast on Brexit has been wrong.

“It’s an incomplete report... deliberately leaked because it gives a bad view,” he said.

The paper is likely to sharpen the debate in cabinet as the least bad option appears to be to remain close to the EU - the “Philip Hammond option”, said the BBC’s assistant political editor, Norman Smith.

But the broader impact on the political debate was questionable, he added, as the public have so far proven “remarkably resistant to these warnings of economic woe”.

The government sources point out that the document has not modeled the effect of a bespoke deal covering trade and financial services—the government’s preferred scenario—and it does not attempt to anticipate the outcome of negotiations.

 

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