Avoiding Brexit Altogether Would Give U.K. $106 Billion Boost

(Bloomberg) --

Remaining in the European Union could give the U.K. economy an 85 billion-pound ($106 billion) boost compared with a no-deal Brexit, according to Bloomberg Economics.

The calculations, based on Jeremy Corbyn’s Labour Party offering a second referendum that leads to the nation staying in the bloc, demonstrate how the Brexit process has turned the usual norms in the U.K. on their head. Economists and investors are warming to the prospect of a left-wing lawmaker who favors nationalization of some industries and stronger worker protections.

While optimism over a Brexit deal has increased this week, the U.K. could still face an election soon, raising the choice between an explicit pledge of a no deal from current Prime Minister Boris Johnson, and Corbyn’s promise to offer a second referendum between remaining in the EU and an as-yet unnegotiated deal.

“For the economy, these two scenarios are a world apart,” Bloomberg Economics’ Dan Hanson wrote in a report Friday.

Under no deal, BE predicts the U.K. economy would see cumulative growth of 5% between 2019 and 2023, which rises to 7.5% if the U.K. votes for a renegotiated deal -- along the lines of a customs union -- in a second referendum next year. A vote to remain then would see the economy expand by 9% more over the period, with the difference between that scenario and no-deal at 85 billion pounds.

BE’s calculations assume the Labour leader would only gain power as part of a coalition, curtailing some of his more radical ambitions.

©2019 Bloomberg L.P.