The Mayor of London has published new analysis of the potential impact of Brexit on the economy, which points to a “lost decade of lower employment and economic growth”, and 87000 less jobs in London.
The analysis commissioned from Cambridge Econometrics by Sadiq Khan suggests that a “no deal” hard Brexit could lead to a lost decade – or even longer – of significantly lower growth, with the country potentially having 500,000 fewer jobs in the worst-case scenario and nearly £50bn less investment by 2030 than would otherwise have been the case.
In London alone, there could be as many as 87,000 fewer jobs and the capital’s economic output could be two per cent lower by 2030 than predicted under the status quo.
The document also looks at the impact each Brexit scenario could have on nine key sectors of the economy. It says that every Brexit outcome analysed would be bad for the British economy, but that the harder the Brexit, the more severe the economic damage could be.
The analysis also shows that London’s economy would suffer significantly less from Brexit than the rest of the UK. For example, economic output across the rest of the UK could be on average between 3 per cent and 3.3 per cent lower by 2030 than it would if Britain were to remain within the Single Market and Customs Union compared with between 1.9 per cent and 2.1 per cent down in London. This would obviously widen geographic inequalities across the UK, and produce more pressure on housing demand in the south east through domesti migration.
The Mayor’s announcement says: “If the UK leaves the European Union in March 2019 with no deal on the single market, customs union or transition arrangements – which remains a real possibility given the short amount of time left to secure a deal and the Government’s mishandling of the negotiations to date – there could be 482,000 fewer jobs across the entire UK, together with 15 per cent – or £46.8bn – less investment than with a continuation of the status quo. The UK’s economic output (measured by Gross Value Added) could fall by 3 per cent by 2030 – the equivalent of £54.5bn”.
The report says that the worst affected key sector in a no-deal hard Brexit scenario would be financial and professional services, which could have up to 119,000 fewer jobs nationally than would otherwise be the case. There could be 92,000 fewer jobs in science and technology, 43,000 fewer jobs in construction and 27,000 fewer jobs across the UK’s creative sector.
Even much softer Brexit scenarios, such as the UK remaining in the Single Market, but leaving the Customs Union after a transition period – the so-called ‘Norway’ option – could result in 176,000 fewer jobs than there otherwise would have been UK-wide.
In this scenario, there could also be a loss of £18.6bn of economic output and £20bn in investment. There would be 40,000 fewer jobs nationally in financial and professional services, 36,000 in science and technology, 18,000 fewer jobs in construction and 14,000 fewer jobs across the UK’s creative and cultural sectors, than there otherwise could have been. In total, there would be 31,000 fewer jobs in London, compared to the 87,000 jobs under threat by a no-deal hard Brexit scenario.
Sadiq reiterated his call for the Government to change course in the negotiations. He wants Ministers to abandon their hard Brexit approach and instead to push for continued British membership of the single market and customs union.
The Mayor of London, Sadiq Khan, said: “This independent analysis reveals the potential economic risks – and human costs – at stake in the negotiations. It should help guide the government to the best outcome for London and the UK.
“If the Government continue to mishandle the negotiations we could be heading for a lost decade of lower growth and lower employment. The analysis concludes that the harder the Brexit we end up with, the bigger the potential impact on jobs, growth and living standards.
“Ministers are fast running out of time to turn the negotiations around. A “no deal” hard Brexit is still a very real risk – the worst possible scenario.”
Ben Gardiner, Director, Cambridge Econometrics, said: “This is the first time that the various impacts of Brexit – trade , investment and migration – have been comprehensively assessed across a number of key indicators and sectors at sub-national level. Our analysis is particularly valuable to local leaders because it indicates the potential impact on employment and output of Brexit under a range of scenarios, which is necessary given the uncertainty surrounding the final outcome of negotiations.”
Jasmine Whitbread, chief executive of business group, London First, said: “The economy is stuck between a rock and a hard Brexit. Leaving the EU will come at a cost and, with many businesses about to make decisions about where they will invest and grow, it’s time the government stopped its ministerial reshuffling and internal politicking and instead set out a coherent plan for continued market access and tariff free trade with Europe.”