1. An optimistic ‘FTA scenario’ for leaving the EU: the UK signs a quick trade deal with the EU, keeps all its existing trade deals and signs a UK-US trade deal. Even in this scenario, UK GDP is projected to be 3% lower by 2020, with 550,000 jobs lost and GDP per household £2,100 lower.
2. A less optimistic ‘WTO scenario’: the UK does not secure a deal with the EU and trades under WTO rules, but is able to recover its trade deals over the coming years and signs a UK-US trade deal. In this scenario, UK GDP could be lower by as much as £100bn – about 5% - by 2020, with 950,000 jobs lost and GDP per household £3,700 lower.
Under both scenarios, Brexit creates a serious economic shock to the UK economy and, while the economy would recover from the shock, 15 years later GDP would still be lower than it would otherwise have been. Even the optimistic scenario would result in a significant negative impact on investment, jobs and prosperity over the next 5 years. It would be possible to model significantly more negative scenarios than these that, for example, take into account long term productivity effects, or knock-on effects on the wider European economy.
See the lecture from earlier here and read the full analysis and PwC report here
Last week we released the results of our member consultation and survey on their views on EU membership. This revealed that a significant majority of CBI members – though not all - think that remaining in the EU is best for their business and for the UK economy as a whole. This new data from PwC supports their views that leaving the European Union presents a significant risk for the UK economy and for business.
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