Johnson's Brexit deal would slash £70bn off UK economy, says NIESR

The Brexit deal secured by UK Prime Minister Boris Johnson would leave the country £70bn worse off than if it remained in the European Union, according to a report released on Wednesday.

The study by the National Institute of Economic and Social Research (NIESR), an independent EU-funded, UK registered charity, said Johnson's deal would cause gross domestic product (GDP) to be roughly 3.5% lower in 10 years' time than if Britain remained a part of the bloc.

On the think tank's estimates, GDP will be 3% smaller each year in perpetuity than it would have been had the UK stayed inside the EU, which is roughly equivalent to losing the annual output of Wales.

The report also estimated that the economy was already 2.5% smaller due to the outcome of the 2016 Brexit referendum, while business investment had undershot by 15% the path it would have followed had the vote been to remain.

"The estimated loss of GDP so far is because businesses generally have not been investing, whereas the loss in the future will because certain types of economic activity in the UK will be no longer profitable," said the report.

Meanwhile, NIESR said the current economic outlook is clouded by significant economic and political uncertainty and depends critically on the United Kingdom’s trading relationships after Brexit, adding that domestic economic weakness is also being amplified by slowing global demand.

Consequently, the report estimated that the UK economy would grow by less than 1.5% in both 2019 and 2020 - assuming that there is no change to Britain’s relationship with the EU but uncertainty persists - a decline from the 1.6% growth achieved in 2018.

Another cut in Bank Rate and government spending would help support growth, with domestic consumption underpinned by rising real wages, the researchers said.

Chancellor Sajid Javid has refused to provide any new estimates from the Treasury on the costs of the government's proposed deal, arguing that it was "self-evidently in our economic interest".