‘Brexit’ could cost the UK economy £100 billion and 950,000 jobs by 2020, according to a report commissioned by the Confederation of British Industry (CBI).
To quantify the impact on the economy the CBI commissioned professional services firm PwC to examine two different exit scenarios; in one the UK negotiates a free trade agreement with no tariffs on exports and imports between the UK and Europe by 2020, and in the other the UK fails to secure a deal with the EU.
Under both scenarios UK living standards, GDP and employment are significantly reduced compared with staying. The analysis indicates the cost of leaving to the British economy could be as much as £100 billion (around 5% of GDP) by 2020.
If the UK leaves the EU GDP per household in 2020 was calculated to be potentially between £2,100 and £3,700 lower, and the UK’s unemployment rate between two and three percentage points higher, than if the UK had remained in the EU.
The CBI also published an independent survey of its members, which found that 80% believe being part of the EU is best for their business and 77% said it was better for the UK economy as a whole.
CBI director-general Carolyn Fairbairn said that the analysis shows why leaving the European Union would be a blow for living standards, jobs and growth.
“The savings from reduced EU budget contributions and regulation are greatly outweighed by the negative impact on trade and investment. Even in the best case this would cause a serious shock to the UK economy,” she explained.
“The findings from PwC’s independent study also explain why the majority of UK businesses are in favour of remaining within the European Union. Even under optimistic assumptions, an exit triggers serious economic disruption. So, in short, leaving the EU could mean the return of significant barriers to trade."
