UK 'worse off after Brexit whatever the deal', Government analysis finds

Britain's Prime Minister Theresa May. Photo / AP file

Britain will be worse off outside the European Union whatever kind of Brexit deal it strikes with Brussels, the latest British Government impact assessment is reported to have found.

The analysis, prepared for the Department for Exiting the EU (DexEU), concluded growth would be lower under a series of potential scenarios, according to a leaked copy seen by the BuzzFeed News website.

Even if the UK is able to negotiate a comprehensive free trade agreement – as Prime Minister Theresa May hopes – it estimates that growth will be down 5 per cent over the next 15 years.

That would rise to 8 per cent if Britain left without a deal and was forced to fall back on World Trade Organisation (WTO) rules.

Alternatively, if the UK were to retain access to the single market through membership of the European Economic Area the loss would be just 2 per cent.

The leaked findings are likely to infuriate pro-Brexit Tory MPs who already suspect the Government is heading for a "soft" break which will retain many of the existing elements of the relationship with Brussels.

A Government spokesman said: "We have already set out that the Government is undertaking a wide range of ongoing analysis in support of our EU exit negotiations and preparations.

"We have been clear that we are not prepared to provide a running commentary on any aspect of this ongoing internal work and that ministers have a duty not to publish anything that could risk exposing our negotiation position."

A Government source added: "As part of its preparations for leaving the European Union, officials from across Whitehall are undertaking a wide range of ongoing analysis.

"An early draft of this next stage of analysis has looked at different off-the-shelf arrangements that currently exist as well as other external estimates.

"It does not, however, set out or measure the details of our desired outcome – a new deep and special partnership with the EU – or predict the conclusions of the negotiations.

"It also contains a significant number of caveats and is hugely dependant on a wide range of assumptions which demonstrate that significantly more work needs to be carried out to make use of this analysis and draw out conclusions."

According to the leaked document – entitled EU Exit Analysis – Cross Whitehall Briefing and dated January 2018 – every sector of the economy would be adversely affected under all three scenarios, with chemicals, clothing, aviation, cars and retail hardest hit.

It also found that every region of the UK would lose out, with the North East, the West Midlands and Northern Ireland facing the biggest loss of growth.

It warned that London's position as a major financial centre could also be severely eroded, with the position under a free trade agreement not very different to operating under WTO rules.

On the positive side, it calculates a free trade deal with the United States could add 0.2 per cent to growth while agreements with other countries such as China, India, Australia and the Gulf states, could together add another further 0.1 per cent to 0.4 per cent.

- PA, AAP