Over the past few weeks we have been treated to various reports on the economic impact of leaving or remaining in the European Union. With so many conflicting facts and figures being bandied around it’s difficult to get a balanced view and this is further exacerbated by the differing opinions of those we elect to make strategic decisions like this on our behalf.
Like the rest of the UK, we at Haines Watts East have differing views on whether we should stay or go. Our advice to business owners who are trying to ‘crystal ball gaze’ Brexit? You could do a lot worse than to read the Open Europe report: “What if …? The Consequences, Challenges & Opportunities Facing Britain outside the EU.” Open Europe is a non-partisan and independent policy think tank that ‘comments as accurately as they can on the arguments and facts advanced on both sides of the debate’. Its report doesn’t deal with non-financial considerations but it does attempt to quantify the economic costs and benefits of Brexit. As such, it should be of help to business owners as they attempt to consider a future, which is, essentially, unknown.
At the risk of depriving you of a good read the report concludes:
- If we decide to leave the EU, whether we flourish or fail will depend on the political and economic decisions that we take in the wake of departure. By itself, leaving the EU will guarantee neither success nor failure.
They go on to calculate the economic outlook we might expect to see in 2030 if Britain left the EU on 1 January 2018:
- In the worst case scenario, where the UK fails to strike a trade deal with the rest of the EU (thereby having to fall back on World Trade Organisation (WTO) rules) and does not pursue a free trade agenda GDP would be 2.2% lower than if the UK had remained in the EU
- In the best case scenario, where the UK strikes a Free Trade Agreement (FTA) with the EU, pursues very ambitious deregulation of its economy and opens up almost fully to trade with the rest of the world, UK GDP would be 1.6% higher than if we stayed within the EU.
However, it should be noted that the above are outliers. The more realistic range is between a 0.8% permanent loss to GDP in 2030 – where the UK strikes a comprehensive trade deal with the EU but does nothing else; and a 0.6% permanent gain in GDP in 2030 – where it pursues free trade with the rest of the world, deregulation and an EU FTA.
Of course the decision to stay or go rests on far more than just economics. Immigration, jobs, crime, UK influence are just some of the considerations we all need to incorporate into our decision-making process. Whatever the future holds it’s going to be an interesting time for the UK and UK business.