The UK think tank, the National Institute of Economic and Social Research (NIESR) showed in its latest report on Wednesday, the UK government’s new Brexit deal could hurt Britain’s economy more than a further extension and continued UK political and Brexit uncertainty.
Key Findings (via Reuters):
“The economic cost of a more distant relationship would outweigh the gains from ending Brexit uncertainty.
Arno Hantzsche, NIESR economist, noted: “We don’t expect there to be a ‘deal dividend’ at all. A deal would reduce the risk of a disorderly Brexit outcome but eliminate the possibility of a closer economic relationship.”
NIESR estimated that in 10 years’ time, Britain’s economy would be 3.5% smaller under Johnson’s plan than if it stayed in the EU – roughly equivalent to losing the economic output of Wales.
In a scenario of ongoing uncertainty similar to now – where Britain keeps the economic benefit of unrestricted access to EU markets but without any long-term guarantees – the economy would be 2% smaller
May’s deal would have limited the damage to 3.0%, while a no-deal Brexit would make the economy 5.6% smaller than if it stayed in the bloc
The Bank of England should cut interest rates to 0.5% from 0.75% at a meeting next week, but said it did not expect the BoE to act until March, when Governor Mark Carney’s successor is due to be in place.”
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