According to expert independent economic analysis commissioned by the Mayor of London, Sadiq Khan, a no deal hard Brexit could lead to a lost decade – or even longer – of significantly lower growth, with the country potentially having 500,000 fewer jobs in the worst-case scenario and nearly £50bn less investment by 2030 than would otherwise have been the case.
In London alone, there could be as many as 87,000 fewer jobs and the capital’s economic output could be two per cent lower by 2030 than predicted under the status quo.
The findings are in an analysis of the potential impact of five different Brexit scenarios on London and the whole of the UK, commissioned by the Mayor last year from leading economic analysts Cambridge Econometrics. The document also looks at the impact each Brexit scenario could have on nine key sectors of the economy.
The independent research shows that every Brexit outcome analysed would be bad for the British economy, but that the harder the Brexit, the more severe the economic damage could be.
The analysis also shows that London’s economy would suffer significantly less from Brexit than the rest of the UK. For example, economic output across the rest of the UK could be on average between 3 per cent and 3.3 per cent lower by 2030 than it would if Britain were to remain within the Single Market and Customs Union compared with between 1.9 per cent and 2.1 per cent down in London. This would widen geographic inequalities across the UK.
Sadiq announced last month that that he had commissioned the independent analysis from Cambridge Econometrics, just days after Brexit secretary David Davis admitted that the Government had not produced detailed economic impact assessments as previously claimed.
If the UK leaves the European Union in March 2019 with no deal on the single market, customs union or transition arrangements – which remains a real possibility given the short amount of time left to secure a deal and the Government’s mishandling of the negotiations to date – there could be 482,000 fewer jobs across the entire UK, together with 15 per cent – or £46.8bn – less investment than with a continuation of the status quo. The UK’s economic output (measured by Gross Value Added) could fall by 3 per cent by 2030 – the equivalent of £54.5bn.
The worst affected key sector in a no-deal hard Brexit scenario would be financial and professional services, which could have up to 119,000 fewer jobs nationally than would otherwise be the case. There could be 92,000 fewer jobs in science and technology, 43,000 fewer jobs in construction and 27,000 fewer jobs across the UK’s creative sector.
Even much softer Brexit scenarios, such as the UK remaining in the Single Market, but leaving the Customs Union after a transition period – the so-called ‘Norway’ option – could result in 176,000 fewer jobs than there otherwise would have been UK-wide.
In this scenario, there could also be a loss of £18.6bn of economic output and £20bn in investment. There would be 40,000 fewer jobs nationally in financial and professional services, 36,000 in science and technology, 18,000 fewer jobs in construction and 14,000 fewer jobs across the UK’s creative and cultural sectors, than there otherwise could have been. In total, there would be 31,000 fewer jobs in London, compared to the 87,000 jobs under threat by a no-deal hard Brexit scenario.
London’s professional and financial services would be the worst hit by a no-deal hard Brexit, with 29,000 fewer jobs by 2030 than if we remained in the Single Market and Customs Union. There would be 11,000 fewer jobs in science and technology, 5,000 fewer jobs in construction and 6,000 fewer jobs across London’s creative sector.
The Mayor warned that time is fast running out on the negotiations, as a final deal including the full details of a transitional deal and detailed agreement on the outline of a future trade relationship must be agreed between the UK Government and the EU 27 by October this year- just 10 months from now – in order to receive ratification from all EU members.
I stand with the Mayor Sadiq and his calls for the Government to change course in the negotiations. Ministers need to abandon their hard Brexit approach and instead to push for continued British membership of the single market and customs union.
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