The independent Office of Budget Responsibility have today issued their assessment of the potential impact of No Deal.
Even though they have used the most positive assessment of No Deal available, they have predicted extremely serious consequences for the UK economy:
- The say they employ “the less disruptive” of the IMF’s two No Deal scenarios – so the potential that the actual outcome could be much worse is significant.
- Borrowing is predicted to be around £30 billion a year higher than OBR’s March forecast from 2020-21 onwards.
- The UK enters a year-long recession in the fourth quarter of 2019. Real GDP falls by 2.1 per cent, around the same as in the early-1990s recession. By mid-2021, real GDP is 4.0 per cent lower than in the OBR’s March forecast.
- The nominal sterling effective exchange rate depreciates by 10 per cent immediately, and is around 5 per cent lower in real terms in the first quarter of 2024.
- Wages and salaries are 2.6 per cent lower at the start of 2024.
- Employment initially falls and unemployment rises, peaking at just over 5 per cent in 2021.
- The combination of weaker nominal earnings growth and higher CPI inflation leaves real wages significantly lower – by 2.5 per cent by the start of 2024.
Commenting Rachel Reeves MP, chair of the Commons Business Committee and leading supporter of the People’s Vote campaign, said:
“The OBR have revealed that No Deal is a minimum £30 billion per year disaster waiting to happen.
“No Deal will be toxic for the British economy, destroying jobs and permanently damaging communities up and down the country. Once a steel works closes it never reopens and people who move away in search of jobs rarely come back: that is why every recession leaves lasting scars.
“But there is something even more important than the economic impact at stake now. Our right as citizens in a democracy to govern ourselves and hold our rulers to account is under threat from the advocates of No Deal.
“There is no mandate for No Deal. No Deal has never been put to the people in any shape or form. Yet an elite in Westminster now want to force it on us, despite all the costs and damage. They are even prepared to suspend Parliament, something not tried since the reign of Charles I, to ram this outrage through.
“However many votes Boris Johnson wins from the 0.25% of the population who are members of the Conservative Party, any plans he has for No Deal have no legitimacy and must be stopped. The people deserve and demand the final say on Brexit and it doesn’t matter how many kippers Boris Johnson flings about, his plan to deny us control of our future stinks like week old fish left out in the sun.
“The only fair and democratic way out of this mess is to have a People’s Vote on whatever emerges from the Brexit process. This morning leading figures from across the EU have made it clear they will give us the time we need to get such a vote to happen.”