The British Treasury presented a report on the consequences of country’s withdrawal from the EU (Brexit) for the British economy. The study was prepared by the experts of the Ministry of Finance and made public the name of the head of the Department George Osborne.
If on 23 June, the British will vote for secession from the EU, a direct result of this will be the discussion of new principles of trading with Europe — in terms of when the UK leaves the free trade zone, and London have agreed on a bilateral basis, the agreements, which the country was present as part of the EU.
The authors distinguish three basic models of future cooperation with the Continent. Most “soft” way — keeping the UK in the European economic area (“Norwegian” scenario). Intermediate, the “base” scenario is the signing of bilateral agreements with European countries, like Canada or Switzerland. The most drastic option — the preservation of trade and economic relations with the EU only at the level of the WTO.
Adopting an interim solution as the main analysts of the Ministry of Finance calculated that in such conditions the GDP of the UK for 15 years will decline by 6.2% from current values. “The annual damage to the economy under these conditions will amount to £1.8 thousand for every Briton or £4.3 million on average per family. Due to the fall in GDP, the country will annually lose £36 million of tax revenues,” the report said. This shows, says further that keeping Britain in the EU is “the best way to ensure growth” for the UK economy for the sake of “prosperity for generations to come”.
The figure of 6.2% is just average for disparities in GDP in the “base” scenario: from 4.6% to 7.8% contraction of the economy in 15 years. If you take the best result with a “soft” scenario, and the worst result in the “worst case” scenario, a “fork” of the fall of the UK GDP, the Finance Ministry estimates, can range from 3.4% to 9.5% by 2030 from the current level. In recalculation per capita it will be from £1 thousand to £2.7 thousand, a Fall of tax revenues will amount to from £20 million to £45 million a year.
Such variations (even within one scenario) is justified by the fact that the data analysis was performed with a large number of assumptions and forecasts. For example, by default it was assumed that the structure of the EU by 2030 will remain in its current form, that new Britain’s relations with Europe, already established, although the question remains the ability of economies to adapt to these changes. In addition, a study of the Ministry of Finance only partially described some of the “turning points” with unpredictable consequences: for example, the Exodus of financiers from the city of London or the UK ability to cope with trade deficit.
The forecast about the European Union in its current state the report is opposed to the planned reform of the EU, which was announced in mid-February after the final round of consultations of EU leaders, with British Prime Minister David Cameron. Taking into consideration the reforms and at the same time save Britain in the EU the potential benefits for the country would translate into additional GDP growth of 4%, or £2.8 thousand per capita.
The February arrangements have become key to position London for the referendum on leaving the EU. If earlier the British Cabinet had hinted that is ready to support Brexit, then after agreement on the reform of the European Union, adopted at the insistence of Cameron, Downing street was actively agitating in favour of keeping Britain in the EU. “Cameron is trying to score political points as soon as possible to hold a referendum and receive approval for continued membership in the EU need to obtain a number of concessions from the EU and its member States”, — explained then in a conversation with the Deputy Director of IMEMO Alexei Kuznetsov.
Shortly thereafter came the first government study of the consequences of Brexit: experts from the office of the Prime Minister said that the restoration of trade and economic relations with the EU in London will go ten years and not two years as stated earlier. In line with the official start of the campaign before the referendum on 14 April, the report of the Finance Ministry — the second such study, in which there is a sharply negative assessment of a possible exit from the EU by the authorities.