Umunna – Government analysis shows all forms of Brexit worse than staying in EU - People's Vote

Umunna – Government analysis shows all forms of Brexit worse than staying in EU

The Government’s economic analysis of Brexit shows that all forms of Brexit would make the UK significantly worse off than staying in the EU.  

Commenting, Chuka Umunna MP, leading supporter of the People’s Vote campaign, said:

“It is now completely clear that any sort of Brexit will damage our national economic interest, leaving us worse off, increasing borrowing, cutting wages and threatening investment in public services.

“Nobody voted for any of that. That the Government can tell us it is the best they can get just shows how little they care about delivering on what was once pledged. This is all about ideology now, and not about the what is good for the country. We are already a million miles away from what was promised, and the gap is widening all the time.

“Anna Soubry and I had to force the Government to publish these figures and now we know why they were so determined to stop us, only caving in when it became clear just how widespread, across all parties, the concern in the House of Commons was about the prospect of the country being driven out of the EU on false pretences.

“A choice between this miserable deal and no deal is no choice at all.  That is why the demand for a People’s Vote in growing all the time. People do not want the endless negotiations and renegotiations this botched deal will bring. They want to have the chance to reject the broken promises of the Brexiters and instead stay full members of the EU, with all the rights and influence we have today.”

/ends 

 

Notes to editors:

Today’s economic analysis published by HM Treasury confirms that no Brexit outcome can be better than the deal we already have as members of the European Union.

Significantly, the analysis shows that even the Government’s fantasy of a desired Brexit outcome, including signed trade deals around the world, means that compared to our current deal we would get:

  • A hit to our economy. The British economy will be hit by 3.9% annually by 2033 – equivalent to over £100 billion every year.
  • Lower GDP per capita. GDP per capita will be reduced by 2.7% annually by 2033 – equivalent to over £1000 for the average person living in Britain.
  • Disruption to UK trade. Barriers to trade would be up to 10% of the value of services trade – the powerhouse of Britain’s economy would suffer to the tune of more than £44 billion a year.
  • Less money for our public services through higher borrowing. Public sector net borrowing as a percentage of GDP will increase as a result of Brexit
  • Lower wages for workers. Compared to staying in the EU, real wages will be 2.7% lower.
  • All UK regions to be worse off. Every single region of the UK will experience a hit to GVA.
  • Economic output as a whole would suffer. Output in both the manufacturing and services industry would suffer by 2 per cent.

 

Contrary to what the Government are spinning, this analysis confirms that the Government’s deal will make Britain poorer in every respect.

The Chancellor has described these figures as not much of a change. But the British people will disagree with him on this. For illustrative purposes, the £26.6 billion hit to our public finances every year is equivalent to:

  • Increasing the education budget by one third
  • Commissioning and building 4 state-of-the-art Queen Elizabeth class aircraft carriers
  • In a singular move, reverse cuts to Universal Credit, scrapping NICS2 insurance contributions, restore nurse bursaries, double parental pay and leave, and fix the social care funding crisis.

 

It is important to note that the Government had modelled an optimistic scenario at best. Key elements of the Chequers agreement have already been dismissed by the EU, and the report assumes that Britain will roll over EU free trade agreements, in addition to striking new ones with the following countries:

  • United States
  • Australia
  • New Zealand
  • Malaysia
  • Brunei
  • China
  • India
  • Mercosur (Brazil, Argentina, Paraguay and Uruguay)
  • the Gulf-Cooperation Council (UAE, Saudi Arabia, Oman, Qatar, Kuwait and Bahrain).

 

The British economy will be hit by 3.9% annually by 2033. A report released by the National Institute of Economic and Social Research has equated this hit to cost £100 billion by the year 2030, giving an illustrative figure for the cost to the economy. (National Institute of Economic and Social Research, 26 November 2018, link)

 

GDP per capita will be reduced by 2.7% annually by 2033. A report released by the National Institute of Economic and Social Research has equated this hit to cost the average person over £1000 by the year 2030, giving an illustrative figure for the cost to the economy. (National Institute of Economic and Social Research, 26 November 2018, link).

 

Barriers to trade would be up to 10% of the value of services trade. The analysis makes clear that “under the modelled White Paper scenario, additional NTBs are estimated to be equivalent to, for goods, 0 to 1 per cent of the value of trade, and for services 2 to 10 per cent of the value of trade.” (HM Government, 28 November 2018, link). The overall value of Britain’s trade in services was £442 billion according to the ONS Pink Book. 10% of this equates to £44.2 billion.

 

Less money for public services. The analysis’ summary of the impact on public sector net borrowing compared to today's arrangements, under the zero net inflows of EEA workers scenario, identifies an additional cost of £26.6 billion to the public purse through higher net borrowing. That is less money we can spend on our public services like the NHS (HM Government, 28 November 2018, link).

 

Lower wages for workers. Compared to staying in the EU, wages will be 2.7% lower, as shown in the table on page 54 of the analysis (HM Government, 28 November 2018, link).

 

All UK regions to be worse off. As demonstrated on page 64 of the technical notes to the analysis, every single region of the UK will experience a hit to GVA (HM Government, 28 November 2018, link)

 

Economic output as a whole would suffer. The analysis makes clear that output in both the manufacturing and services industry would suffer by 2 per cent as a result of the Government’s preferred outcome. (HM Government, 28 November 2018, link).

 

The Government analysis assumes an entire host of new free trade agreements will be struck

“For the purposes of EU exit modelling, the UK is assumed to pursue successful trade negotiations with the United States, Australia, New Zealand, Malaysia, Brunei, China, India, Mercosur (Brazil, Argentina, Paraguay and Uruguay) and the Gulf-Cooperation Council (UAE, Saudi Arabia, Oman, Qatar, Kuwait and Bahrain).“ (HM Government, 28 November 2018, link).