New government data forecasts economies throughout UK will be hit as result of Brexit

Parts of the UK that backed a Leave vote would face the heaviest hit as a result of Brexit, according to estimates by government officials.

The forecasts, seen by MPs, model the 15-year impact of the UK staying in the single market, doing a trade deal with the EU or leaving without a deal.

They suggest that in England, the North East and West Midlands would see the biggest slowdown in growth.

The government said the document did not represent its policy.

It added that the forecasts did not “consider the outcome we are seeking in the negotiations”.

And one Eurosceptic Tory MP said the figures were “complete nonsense”.

Following a leak of some of the information to Buzzfeed last week, and political pressure to release it, ministers agreed to allow MPs to see the reports on a confidential basis in the House of Commons library.

In each scenario in the forecasts, growth would be lower, by 2%, 5% and 8% respectively, than currently forecast over a 15-year period.

In north-east England growth would be 3% lower if the UK stayed in the single market, 11% under a trade deal and 16% with no trade deal compared with staying in the EU, the forecast says.
The research suggests London – which backed Remain – would fare the best, with reductions of 1%, 2% and 2.5% in each of the three scenarios.

Scotland’s estimated hit would be 2.5%, 6% and 9%. Wales would see reductions of 1.5%, 5.5% and 9.5%.
Patrick Minford, of the Economists for Free Trade group, said: “The continued leaks from Whitehall sources about the results of civil servants’ latest modelling attempts is, sadly, a continuation of Project Fear’s effort to paint Brexit as a damage limitation exercise.”

The group has produced its own forecasts, based on “proper, independent free trade policy,” which predicts that UK economy would grow by 4% in the long term after Brexit.

Brexit-backing Conservative MP Jacob Rees-Mogg has accused Treasury officials of “fiddling the figures” to make all options but staying in the EU look bad.

Whitehall trade union reacted angrily to this suggestion and government ministers have dismissed his allegation.

Commenting on the statistics, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said: “The sharp deterioration in the UK’s net trade position in December was disappointing and means that trade is likely to have been a drag on UK growth in the final quarter of the year. This deterioration reflects a significant increase in imports in the quarter, more than offsetting the rise in exports.

“Although there was a surprise pick-up in construction output, the sector remains a concern and together with the widening in the UK’s trade deficit and weakening industrial output indicates that economic conditions are becoming more sluggish. While many exporters are benefiting from stronger growth in key trading markets, imports continue to grow at a solid pace with businesses continuing to report little in the way of import substitution despite their high cost. If this trend continues as we expect, the contribution of net trade to UK GDP growth over the near term is likely to be limited at best.

“As we move through the Brexit process more needs to be done to provide clarity on what the future trading relationship with the EU will look like. Action is also needed to address the longstanding issues, from the UK’s skills gap to our creaking digital and physical infrastructure, that continue to undermine the UK’s trade performance.”

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