Report: "Hard" Brexit could cost Britain up to 9.5 per cent of GDP

Britain could lose up to 9.5 per cent of its gross domestic product within 15 years if it leaves the European Union's single market in a "hard" Brexit, The Times quoted a leaked government report as saying on Tuesday.

The forecasts, which say the treasury could lose up to 66 billion pounds (81 billion dollars) annually, are contained in a draft cabinet committee paper and are thought to be based on a controversial treasury report published in April, which critics had dismissed as scaremongering by the treasury, the newspaper said.

"This is Brexit reality, and precisely why parliament must be involved in achieving the best deal for the UK," Conservative lawmaker Anna Soubry wrote on Twitter alongside an image of The Times' front-page story.

Soubry is among dozens of lawmakers, including other Conservatives, lobbying for parliament to be given a vote on the government's strategy for negotiating Brexit. Parliament is expected to debate the issue on Wednesday.

"The horrific damage of a hard Brexit is clear," Soubry said in a separate statement via Open Britain, a cross-party group campaigning for Britain to stay in the single market.

"Less tax revenue means less to invest in schools and hospitals, lower trade and investment means businesses and jobs at risk," she said.

News of the pessimistic forecasts came as the pound slumped to below 1.23 dollars on Tuesday after Prime Minister Theresa May and Brexit minister David Davis appeared to suggest that they could seek a Brexit outside the EU single market to allow Britain to control migration from the bloc.

Analysts said the latest slump in the pound, which has dropped steadily since Britain voted to leave the EU on June 23, was caused partly by news that Russia's VTB Bank plans to move its European headquarters out of London because of expected disruption from Brexit.

"We did have bigger plans for the London office, but after Brexit we are scaling them down and building them up elsewhere," Herbert Moos, VYB's chief financial officer, told the Financial Times, adding that the bank would choose a new location later this year.

The Times quoted the leaked cabinet document as saying trade volume and foreign direct investment could both fall by around 20 per cent after a "hard" Brexit.

John McDonnell, the opposition Labour party's shadow chancellor, said losing access to the single market "would be devastating for jobs and livelihoods."

"The Tories (Conservatives) need to stop playing political games," McDonnell said in a statement reacting to The Times' report.

"The British people voted to leave the European Union and all sides must respect that decision, but what they certainly didn't vote for was economic misery and loss of jobs," he said.

Last update: Tue, 11/10/2016 - 13:01
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