Monday 10 December 2018

UK would face 'lost decade' in no-deal Brexit

London Mayor Sadiq Khan. Photo: REUTERS
London Mayor Sadiq Khan. Photo: REUTERS

Colm Kelpie

A no-deal Brexit could result in close to half-a-million fewer jobs in the UK and a loss of about £47bn (€53bn) in investment, a report commissioned by the mayor of London has found.

The report also argues that London could suffer much less from Brexit than the rest of the country, thereby increasing geographic inequalities across the UK.

There is no mention of Northern Ireland, or Ireland, in the study by Cambridge Econometrics.

Financial and professional services could be the hardest hit, with 119,000 fewer jobs nationally, the report claims. Other sectors reported affected would include science and technology, construction and the creative sector.

"As expected, the more severe the type of Brexit, the greater the negative impact will be on London and the UK," the report stated. "The results show that Brexit will not only reduce the size of the UK economy, compared to what may have happened if the UK remained in the single market and customs union, but also put it on a slower long-term growth trajectory."

Even softer Brexit scenarios, it is argued, like the UK remaining in the single market, but leaving the customs union after a transition period, could still result in a 176,000 fewer jobs.

As part of the study, five scenarios were examined, from the UK remaining in the single market and customs union, to leaving both, failing to get a free trade agreement or a transition period, and invoking World Trade Organisation rules.

The scenario that largely currently fits the direction of travel is number four, which envisages a two-year transition period, before leaving the single market and customs union and falling back on WTO rules.

Scenario two envisages the UK remaining part of the single market, but not the customs union, while scenario three has it in the customs union but not the single market.

"London is expected to experience a loss of 0.8pc (£4.1bn/€4.6bn) in Gross Value Added (GVA) by 2030 and 0.6pc (30,500 people) in employment under scenario two (compared to what may have happened if the UK remained in the single market and customs union), a loss of 1.9pc (£9.6bn/€10.8bn) in GVA and 1.6pc (83,800 people) in employment under scenario four, and a loss of 2.1pc (£10.8bn/€12bn) in GVA and 1.6pc (87,000 people) in employment under scenario five.

"It is not expected to be affected as much as the UK, in terms of GVA and productivity."

London Mayor Sadiq Khan said Britain would be shunted into a "lost decade" of low investment with hundreds of thousands of lost jobs if it fails to agree a trade deal with the EU. "If the government continues to mishandle the negotiations we could be heading for a lost decade of lower growth and lower employment," Mr Khan said. "Ministers are fast running out of time to turn the negotiations around."

Brexit was the main reason for a 37pc drop in new jobs available in London's financial sector last month, according to a separate report from recruiting firm Morgan McKinley.

Irish Independent

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