Business World

Monday 18 November 2019

Europe exit could cost Britain £56bn a year

David Cameron
David Cameron

Colm Kelpie

Pulling out of the European Union could shrink Britain's economy by £56bn a year by 2030 and would only be mitigated if it struck a free-trade deal, a think tank has warned.

A British exit from the EU could be pushed up the political agenda if David Cameron is returned to Downing Street after the general election in May.

The Conservative Party prime minister has pledged to hold and in-out referendum by 2017 if returned to power, and is seeking reforms to how the EU is run.

Think-tank Open Europe yesterday published a report on the consequences of a British exit and warned that Britain's gross domestic product would suffer if it failed to strike a free trade deal with Europe from outside the EU, and also did not pursue a free trade agenda with the rest of the world. This could result in a drop in GDP of 2.2pc, the think-tank warned.

Open Europe set out a range of scenarios in which a British exit could impact the country.

In the worst case, a hostile exit, GDP would be 2.2pc lower than if the UK had stayed in the EU. The best case, involving Britain reaching a free-trade deal with the rest of the EU and removing barriers to trade with the rest of the world, sees GDP increasing 1.6pc.

The best three scenarios require Britain to refrain from curbs on immigration.

This is a challenge to Nigel Farage, the head of Britain's UK Independence Party, who wants to place curbs on immigration.

"Transforming Britain into the deregulated, free trading economy it would need to become outside the EU sounds easy in theory, but in practice would come up against some serious political resistance within the UK itself," said Open Europe chairman Rodney Leach.

"The worst scenario is if the UK leaves the EU and then pursues protectionist policies."

Mr Cameron has made a referendum on Britain's membership of the bloc a key plank of his party's re-election strategy. While he has pledged to campaign for the UK to remain within a reformed EU, defections to UKIP have led him to harden his rhetoric.

UKIP's economy spokesman, Patrick O'Flynn, said the report was "unnecessarily pessimistic, and even tending to be alarmist".

"We believe Britain would be better off out of the EU, because we could easily negotiate a bespoke trade deal based on our enormous economic leverage," Mr O'Flynn said.

The party seeks immediate withdrawal from the EU as well as the introduction of an Australian-style system of admitting only immigrants who meet specific criteria. (Additional reporting by agencies)

Irish Independent

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