No End to Brexit Blight for Economy as Britain Leaves the EU
No End to Brexit Blight for Economy as Britain Leaves the EU
Brexit uncertainty could plague the British economy for years to come after the U.K leaves the European Union this week, new research claims.
In a report published Tuesday, the Research and Development Corporation called into question hopes that Britain finally quitting the EU after three years of political deadlock will unleash a wave of pent-up investment.
The reason: Britain is about to embark on difficult post-Brexit trade talks with its largest trading partner. Prime Minister Boris Johnson, fresh from a decisive election victory, has just 11 months to strike a free-trade deal. If he fails, the U.K. will face a potentially disorderly Brexit at the end of the year when the planned Brexit transition period ends.
According to the report, growth this year could be 0.17% lower than it would be in the absence of trade negotiations, and the effect could increase to 0.39% by 2025 if the talks end up being extended. That means a 1.6 billion-pound ($2 billion) hit to the public finances, which could increase to 3.75 billion pounds by 2025.
The EU’s chief Brexit negotiator, Michel Barnier, has warned that Britain will probably need more time, though U.K. Johnson is adamant that the current deadline will be met.
Research from Bloomberg Economics puts the total cost of Brexit since the 2016 referendum at 130 billion pounds as uncertainty continues to take a toll on companies and consumers. Even with some anticipated fiscal stimulus, the annual cost is likely to keep increasing, according to BE economist Dan Hanson.
British negotiators “will need to weigh up the potential short-term economic implications of prolonged trade policy uncertainty if negotiations last beyond December 31 2020, versus the potential negative long-term economic implications of an agreement that is made quickly but lacks the comprehensiveness required for a broad and deep future U.K.-EU trading relationship,” the RAND report said.
To contact the reporter on this story: Jill Ward in London at jward98@bloomberg.net
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Andrew Atkinson
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