THE UK economy would be 3.5 per cent smaller in the long term under Boris Johnson’s Brexit deal, compared with continuing European Union membership, a leading independent think-tank is warning.
The National Institute of Economic and Social Research says it would not expect UK economic activity to be boosted by approval of Mr Johnson’s deal, which involves leaving the single market.
In its latest forecast, published today, the think-tank says the UK outlook is “clouded by significant economic and political uncertainty and depends critically on the United Kingdom’s trading relationships after Brexit”.
The NIESR adds: “We would not expect economic activity to be boosted by the approval of the Government’s proposed Brexit deal. We estimate that, in the long run, the economy would be 3.5% smaller with the deal compared to continued EU membership.”
The think-tank forecasts, on the assumption that chronic uncertainty persists but the terms of EU trade remain unchanged, that growth will be less than 1.5% in 2019 and 2020, although it notes this prediction is “subject to significant uncertainty”.
It says risks to growth continue to be weighted to the downside, although not as much as in its previous forecast “given the reduced likelihood of a no-deal Brexit”.
The NIESR now judges there is a 15% probability of UK economic output falling in 2020, “also reflecting the risk of a more severe global slowdown”.
The think-tank noted the UK economy was estimated to be 2.5% smaller now than it would have been otherwise, as a result of the 2016 Brexit vote.
By Ian McConnell
Source: Herald Scotland