Government forecasts warn: Brexit makes UK worse off

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Europe

Britain will be economically worse off in any scenario outside the European Union, the government said Wednesday, as the Bank of England warned that a no-deal Brexit would trigger a financial crisis.

The government's plans for post-Brexit ties with the European Union would still cost the economy around 3.9 percent of gross domestic product over 15 years, a government report found.

British Finance minister Philip Hammond said the departure deal agreed Sunday between Britain and the EU was the optimum way to minimize the cost of leaving the bloc.

Britain's Chancellor of the Exchequer Philip Hammond leaves 11 Downing Street in London, November 26, 2018. /VCG Photo

The report comes as Prime Minister Theresa May took the divorce deal to a skeptical Scotland, where the fishing industry is concerned about EU access to British waters.

May has less than a fortnight to convince hostile MPs to back the deal in a December 11 vote and avoid plunging Brexit into chaos, four months from Britain's March 29 departure date.

The report does not exactly model for the deal struck with Brussels, the outlines of which remain vague. But it found that a reduction in EU immigration would cost the economy more than the current free movement rules.

Britain's Prime Minister Theresa May insists Britain could strike trade agreements outside the European Union (EU) as she launches a nationwide tour to whip up support for the contested Brexit divorce deal, November 27, 2018. /VCG Photo

"It shows we will be better off with this deal," said May, telling lawmakers in parliament that this analysis does not show the UK will be poorer in the future than today.

Opposition to the deal struck with EU leaders earlier this month has raised concern about the possibility of Britain crashing out of the EU with no agreement.

The Bank of England on Wednesday said such a scenario would trigger a financial crisis in which the pound would plunge by 25 percent and house prices would fall by 30 percent.

"Our job is not to hope for the best but to prepare for the worst," Bank of England governor Mark Carney told reporters.

Governor of the Bank of England Mark Carney hosts a Financial Stability Report press conference at the Bank of England in London, England, November 28, 2018. /VCG Photo

Hammond insisted that the economy was not the only consideration and controlling Britain's borders, money and laws also had value.

"We have to look not only at the economy but the need to heal a fractured nation," the chancellor said.

Source(s): AFP