In the long term, a Brexit without a trade agreement will be three more costly than the health crisis for the British economy, according to a study published Tuesday.
The bill promises to be steep. A Brexit without a trade deal could be three times more costly in the long run than the Covid-19 pandemic for the UK economy, warns Tuesday a study du centre de recherche “The UK in a Changing Europe”.
He warns that the impact of Covid-19 is likely to moderate or to overshadow, politically and economically, that of a “no deal” at the end of the transition period which ends at the end of January. But in the short term, a Brexit without a trade deal is “bad news” for the economic recovery and in the long term it will be “more important” than the health crisis.
5.7% impact on GDP
The research center, which has worked with the London School of Economics, estimates that due to Brexit growth will be weaker over a long period than it would have been without leaving the EU. It estimates the impact on gross domestic product (GDP) over fifteen years at 5.7% compared to the current level, against 2.1% for Covid-19.
“The total cost to the UK economy in the long run will be two to three times greater than that implied by the Bank of England’s forecast for the impact of Covid-19,” the study says. These projections are made even though it is still difficult to see clearly about the repercussions of the health crisis and on its long-term effects, at a time when a second wave is emerging in Europe, at the risk of further penalizing the economy.
Customs duties, administrative controls
The report reminds us that the most immediate and visible consequences of a “no deal” will be observed at the borders with the risk of queues and shortages of certain foods. The economy will be especially affected by the reestablishment of customs duties and administrative controls for trade with the continent, which will penalize businesses and households.
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“Although the Prime Minister has said that the absence of an agreement is a ‘good outcome’, our report shows that it could lead to serious disruption and have a strong economic impact,” said Anand Menon, director of the research center . He further warns of fallout “within the UK itself, in particular Northern Ireland, and internationally as well.”
Prime Minister Boris Johnson has given himself until October 15 to find common ground with Brussels on the post-Brexit relationship, otherwise he will opt for a “no deal”. He believes the country will be able to prosper even in the event of a brutal divorce from the EU, including negotiating trade deals around the world.
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