Economic impact of Brexit revealed in new report
Cambridge Econometrics’ study ‘Preparing for Brexit’ published today by London Mayor Sadiq Khan represents a new insight into the local economic impacts of the UK’s exit from the European Union.
The report, which is the first comprehensive assessment of Brexit across key indicators and sectors at a sub-national level reveals a spread of impacts under five different scenarios, ranging from a status quo (where the UK remains in the Single Market and Customs Union) to an extreme no-deal (WTO rules) outcome.
The Mayor of London, Sadiq Khan, said:
This independent analysis of Brexit reveals the potential economic risks – and human costs – at stake in the negotiations …. I’ve released these impact assessments because the British people and our businesses have a right to know the likely impact on their lives and personal finances.
This new analysis shows why the Government should now change its approach and negotiate a deal that enables us to remain in both the single market and the customs union.
It is thought that London will emerge relatively better than the rest of the UK because it has a higher concentration of high-value sectors, which are more resilient and able to recover from economic shocks more quickly.
However, the results show that Brexit will not only reduce the size of the UK economy (compared to what may have happened if the UK remained in the single market and customs union), but also put it on a slower long-term growth trajectory (the economy is still expected to grow, but at a slower rate than if Brexit did not occur).
Ben Gardiner, Director at Cambridge Econometrics, said:
This is the first time that the impact of Brexit has been comprehensively assessed across a number of key indicators and sectors at sub-national level, in this case clusters of London boroughs in both inner and outer London.
The study adds a new dimension to existing studies and offers a valuable insight into the potential impact of Brexit on employment and output under a range of scenarios.
We think that this approach could be applied to other parts of the UK to help political and business leaders plan for the future.
Negative impact on investment
The modelling results show that Brexit will have a negative impact on the UK economy across all key indicators, in particular on investment where £20.2bn would be lost by 2030 under the ‘softest’ scenario and £46.7bn under the most severe Brexit scenario.
Employment will fall
London is expected to experience a loss of 30,500 people in employment under the ‘softest’ scenario, rising to 87,000 under the ‘hardest’ scenario, by 2030.
However, it is not expected to be as negatively affected as the rest of the UK, in terms of GVA and productivity.
Financial and professional services sector will be hit the hardest
The financial and professional services could experience up to 119,000 fewer jobs nationally in 2030 than would otherwise be the case.
However, the science and technology, creative and construction sectors, which make up a high proportion of economic activity in the UK, particularly in London, are also sectors which will be hit hard by Brexit.
To read the full report, please see:
To read the Greater London Authority’s full press release, please see here.
To discuss our methodology or how our approach could be applied outside London please contact Ben Gardiner.