Hard Brexit will cost you £11,500, according to another expert report
Last week, we looked the World Bank’s assessment of the impact of Brexit on Trade.
The latest in a long run of reports from various experts warning about the dangers of leaving the EU. This week we look at a report that the Dutch company Rabobank published on the impact on the economy in general.
They looked at four different scenarios.
They found that:
In all three scenarios, the UK ends up in a two-year recession right after Brexit has materialised in 2019. The magnitude of the recession varies considerably in the scenarios, with a GDP decline over two years of 2.4% in a hard Brexit scenario, 1.1% in the FTA scenario and 0.3% in a soft Brexit scenario. Although recovery sets in after the initial shock, growth remains below potential growth over a long period of time. In the hard Brexit and FTA scenarios, there is still a substantial output gap even in 2030.
Ultimately, a hard Brexit will cost the UK 18% of growth in 2030, compared to a situation where the UK would continue its EU membership. In absolute terms, this comes down to £400bn until 2030, which is equal to £11,500 per British worker. An FTA and soft Brexit will cause less harm but will still cost the UK economy roughly 12.5% and 10% of GDP growth, respectively. This is equal to £9,500 (FTA) and £7,500 (soft Brexit) per British labourer.
The report suggests trade will be badly hit which is something we discussed in our blog about what’s at stake for Business.
Trade volumes deviate substantially in our three scenarios, with hard Brexit export volumes about 30% lower than in our Bremain scenario and 15% and 10% lower in our FTA and soft Brexit scenarios, respectively. Import volumes are 27% (hard), 23% (FTA) and 16% (soft) lower compared to our Bremain scenario.
The slowdown in trade in all three scenarios is the result of higher trade barriers between the EU and the UK in the post-Brexit era. Due to imposed tariff and non-tariff barriers between the EU and the UK, export and import prices in the UK rise steeply. Export and import prices in the hard Brexit scenario are 25% higher than in our Bremain scenario. Export prices in FTA and soft Brexit are roughly 20% higher, whereas import prices are 14% higher.
Ultimately, the report paints a picture of a costly Brexit that in all scenarios will cost the average person thousands of pounds.
If you enjoy our content and share our goals you can help us by making a small donation.
Or support us for free by doing your Amazon shopping through this link (bookmark it!).
Or by commenting on and sharing the blogs and joining our newsletter.