Skip to content
#Open journalism No news is bad news

Your contributions will help us continue to deliver the stories that are important to you

Support The Journal
Image: Dominic Lipinski/PA Images

No post-Brexit trade deal with EU could hit UK economy 'three times harder' than Covid-19 in long term

A report from a think tank based on modelling from the London School of Economics paint a grim picture as far as the UK economy is concerned.
Sep 22nd 2020, 10:20 PM 19,440 23

FAILURE TO REACH an agreement with the EU in post-Brexit trade talks could hit Britain’s economy three times harder in the long term than coronavirus, a think tank has warned.

Queues at the border, shortages of fresh food and medicine as well as more “hassle” travelling to the continent are also possible, according to the UK in a Changing Europe group.

A report by the organisation, based on modelling with the London School of Economics, said the impacts of coronavirus may mitigate or obscure the impact of a no-deal exit.

But it warned that not forming an agreement with Brussels would have a significant impact in the long term.

The authors wrote: “The claim that the economic impacts of Covid-19 dwarf those of Brexit is almost certainly correct in the short term.

“Not even the most pessimistic scenarios suggest that a no-deal Brexit would lead to a fall in output comparable to that seen in the second quarter of 2020.

“However – assuming a reasonably strong recovery, and that government policies succeed in avoiding persistent mass unemployment – in the long run, Brexit is likely to be more significant.

“Our modelling with LSE of the impact of a no-deal Brexit suggests that the total cost to the UK economy over the longer term will be two to three times as large as that implied by the Bank of England’s forecast for the impact of Covid-19.”

The transition period, which kept the UK aligned to the EU’s single market and customs union rules to allow trade to flow smoothly after Brexit, expires at the end of the year unless both sides agree to an extension – something Boris Johnson has ruled out.

Trade deal talks between the two sides are continuing, but the Prime Minister has set a deadline of 15 October for an agreement to be reached, otherwise he has said he will simply walk away from the negotiating table.

#Open journalism No news is bad news Support The Journal

Your contributions will help us continue to deliver the stories that are important to you

Support us now

If there’s no trade deal, there are also fears it could impact sections of the Irish economy severely. 

Professor Anand Menon, director of the UK in a Changing Europe, said: “While the Prime Minister said no deal is a ‘good outcome’ our report shows that it may lead to significant disruption and will have a significant negative economic impact.

“As significant will be the political fallout of no deal, particularly with the UK and EU, but also inside the UK, particularly Northern Ireland, and internationally too.”

As the clock ticks down, get all the best Brexit news and analysis in your inbox


Send a tip to the author

Press Association

COMMENTS (23)

This is YOUR comments community. Stay civil, stay constructive, stay on topic. Please familiarise yourself with our comments policy here before taking part.
write a comment

    Leave a comment

     
    cancel reply
    Back to top