In the minds of many prominent Leavers, a no-deal scenario has become the purest form of Brexit. It’s a dangerous comparison with an undeliverable fantasy - much like the bus promises of their 2016 referendum campaign. Proven time and time again, leaving the European Union without a deal, in both a mitigated and non-mitigated way, will damage our economy.
Researchers at Durham University Business School have provided continuing studies on the economic future of the UK post Brexit and have recently simulated the impact these two no-deal Brexit scenarios would have on the UK economy by analysing the path of UK GDP in the aftermath. The outcome of the study has prompted North East Labour MEP Jude Kirton-Darling to warn Conservative Party leadership contenders against the damage a no-deal Brexit can cause: “This is further proof that a no-deal Brexit should not be on the negotiating table as an option, or anywhere near it. With damning evidence against it piling on, I find it shocking that no-deal is still featuring so prominently in the Brexit discourse.
"As Tory candidates prepare for a live leadership debate this Sunday in the race to replace Theresa May as UK Prime Minister, I urge them to explain how exactly they are going to avoid economic and social damage to our country if they are advocating no-deal. I, of course, extend this to their main candidate and debate absentee Boris Johnson - a notorious perpetuator of Brexit myths and fantasies."
The results - although not surprising - paint an alarming picture of the following decade after a no-deal Brexit. The UK economy is expected to take a significant hit in the short-run of over 4%, with a further fall predicted for the following years. And that’s in the least worst scenario of no-deal Brexit. The short-run drop in UK GDP could be as large as 7-8% in the absence of mitigation.
Durham University Business School researchers give two main reasons for these highly concerning economy prospects. One reason is that UK imports will still face large non-tariff barriers, such as customs checks in the event of a no-deal Brexit, but also because this type of rupture from the EU will mean that UK exporters to the EU will see significant profits decreases. This is very troubling news for workers in these UK exporting firms, as it will have a knock-on effect on their wages and employment.
It’s important to point out that a no-deal Brexit would cause more damage to the UK economy than the 2008-09 recession which, until now, was by far the worst Britain’s economy had performed since at least World War II. The tremors of this recession are perhaps still being felt today.
At a regional level, we know the North East is the English region to have benefitted the most from EU funding over the years which has helped offset years of Tory cuts and austerity. It is also hugely reliant on exports to power the regional economy and jobs. The next UK Prime Minister must understand that any form of no-deal Brexit is a no-go zone, or we would single-handedly be wrecking our economy and the future prosperity of our country.