Brexit: Official forecasts suggest economies throughout UK will be hit

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image source, PA

Parts of the UK that backed a Leave vote would face the heaviest hit as a result of Brexit, according to estimates by government officials.

The forecasts, seen by MPs, model the 15-year impact of the UK staying in the single market, doing a trade deal with the EU or leaving without a deal.

They suggest that in England, the North East and West Midlands would see the biggest slowdown in growth.

The government said the document did not represent its policy.

It added that the forecasts did not "consider the outcome we are seeking in the negotiations".

And one Eurosceptic Tory MP said the figures were "complete nonsense".

Following a leak of some of the information to Buzzfeed last week, and political pressure to release it, ministers agreed to allow MPs to see the reports on a confidential basis in the House of Commons library.

In each scenario in the forecasts, growth would be lower, by 2%, 5% and 8% respectively, than currently forecast over a 15-year period.

In north-east England growth would be 3% lower if the UK stayed in the single market, 11% under a trade deal and 16% with no trade deal compared with staying in the EU, the forecast says.

The research suggests London - which backed Remain - would fare the best, with reductions of 1%, 2% and 2.5% in each of the three scenarios.

Scotland's estimated hit would be 2.5%, 6% and 9%. Wales would see reductions of 1.5%, 5.5% and 9.5%.

Patrick Minford, of the Economists for Free Trade group, said: "The continued leaks from Whitehall sources about the results of civil servants' latest modelling attempts is, sadly, a continuation of Project Fear's effort to paint Brexit as a damage limitation exercise."

The group has produced its own forecasts, based on "proper, independent free trade policy," which predicts that UK economy would grow by 4% in the long term after Brexit.

Brexit-backing Conservative MP Jacob Rees-Mogg has accused Treasury officials of "fiddling the figures" to make all options but staying in the EU look bad.

Whitehall trade unions reacted angrily to this suggestion and government ministers have dismissed his allegation.

The government has said the analysis is preliminary and crucially does not measure the impact of the UK's preferred option of a bespoke and comprehensive trade agreement, covering goods and financial services.

A spokesman said: "As ministers clearly set out in the House, this is provisional internal analysis, part of a broad ongoing programme of analysis, and further work is in progress.

"We are seeking an unprecedented, comprehensive and ambitious economic partnership - one that works for all parts of the UK. We are not expecting a no-deal scenario."

The research suggests that the option of staying in the single market and customs union, which has been rejected by ministers, would be the least damaging but would still see growth across different parts of the country between 1% and 3% lower than current forecasts.

In the event of a limited free trade deal being negotiated, projected growth would be 8% lower in the West Midlands, north-west England and Northern Ireland, by 6% in Scotland and 5.5% in Wales.

Should the UK leave the EU in March 2019 without any kind of deal, it suggests four parts of the UK would see a double digit slowdown in GDP growth.

As well as north-east England, north-west England and Northern Ireland would see a 12% slowdown, while the West Midlands would see a 13% slowdown.

Other official estimates suggest the UK car industry's GDP would shrink by 1% if the UK remained in the EU single market but would lose 8% if there was a free trade agreement and 8.5% if the UK left without a deal and went to World Trade Organisation (WTO) rules.

The figures emerged as representatives of Nissan and other Japanese companies are set to meet Theresa May and Chancellor Philip Hammond on Thursday.

Former attorney general and Conservative MP Dominic Grieve said the figures illustrated the risks of leaving the EU without a deal, which he said would hurt the "poorest and vulnerable" in society.

Even if the UK achieved its stated objective of a deep and special partnership with the EU and trade deals with countries like the US, he said it was likely to yield, at best, a very small economic boost.

But Eurosceptic Conservative MP John Redwood said the risks of a no-deal scenario had been overestimated and the Treasury figures were "complete nonsense".

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