Prime Minister Theresa May's Brexit deal could reduce UK GDP per capita by as much as 5.5% in ten years' time, according to a joint report by economists.
The report, The economic consquences for the Brexit deal, was carried out by the Centre for Economic Performance at the London School of Economics, Kings College London and the Institute for Fiscal Studies (IFS). This considered the consquences of three situations: remaining in the EU, the deal and no-deal Brexit.
They found the deal recently approved by the Cabinet and EU leaders could lead to a cut in UK GDP per capita by as much as 1.9%-5.5% over the next ten years.
The cost to public finances would be between 0.4%-1.8% of GDP over the same period for the draft deal or even more for a no-deal at 1%-3.1%.
"Such a large economic impact would also have major implications for the public finances. These would far outweigh any gains resulting from reduced EU contributions," the report said.
To estimate the implications for the government finances, the report assumed a 1% fall in GDP per capita reduces government revenue by 0.4% of GDP.
May's Brexit deal, which was approved by Cabinet earlier this month and EU leaders last weekend, is still facing major criticism. Already a number of ministers have resigned and May is still subject to calls to step down.
Professor Jonathan Portes, senior fellow for The UK in a Changing Europe, said: "The Brexit deal would leave us in a customs union with the EU for the indefinite future - but it is a long way from frictionless trade.
"The additional trade barriers, combined with reductions in both skilled and unskilled migration from the ending of free movement, would leave the UK significantly smaller than it would otherwise have been over the medium to long term. That in turn would mean higher taxes or public spending."
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