A “no deal’ Brexit will hold back the North East of England’s economy by 16%, the Government’s own analysis reveals as it lays bare how the north, Midlands and Northern Ireland would be worst affected by quitting the EU.
Sky News and the BBC have both published details from the controversial leaked Brexit impact assessment, and it makes grim reading for every region and country that makes up the UK.
The report sets out how how much more slowly the economy of each area would grow.
The North East, which overwhelmingly voted to Leave the EU, would suffer the most harm, according to the forecast.
Over 15 years, economic growth would be lower by 3% if the UK stayed in the single market, down 11% if the country got a free trade agreement with the EU, and 16% worse off under ‘no deal’ World Trade Organisation terms.
The GDP of the West Midlands would be hit by 13%, and both the North West and Northern Ireland by 12%, under ‘no deal’. By contrast, London would only be affected by 3.5% under the worst-case scenario.
Meanwhile, Sky News also obtained official estimates of the potential impact of non-tariff barriers – such as extra red tape, customs checks and rules of origin regulations – on various economic sectors.
The motor industry faces cost increases of between 5% and 13%, while the retail and wholesale industry could see costs rise by between 7% and 20%.
The economically important financial services sector stands to suffer a 5% to 10% cost increase, but construction faces no extra costs.
The potential impact on automotive manufacturers could cause concerns as Mrs May prepares to host a meeting with Japanese business leaders on Thursday – including representatives from the country’s motor industry.
Paul Brannen, Labour MEP for the North East of England, said: “This is the type of news we always feared Brexit would bring.
“As the poorest English region, the North East was inevitably going to be more vulnerable to the economic shock of leaving the EU. To see this figure in black and white however is a real shock.
“A 16% reduction in the GDP of the North East translates into thousands of job losses.
“This is frankly a nightmare scenario for our region and for the government to be aware of this and still be willing to consider a no deal Brexit is absolute madness. At the very least we need to stay in the Single Market and the Customs Union.”
Liberal Democrat MP Tom Brake, the party’s Brexit spokesperson, said: “This is a damning outlook for Britain. The Tories are putting everything on the line because they do not care about the lives and livelihoods of the people of the UK.
“The government need to start being clear what they are fighting for. They are still keeping no deal on the table despite how crippling it would be to the regional economy.
“People did not vote to make themselves poorer. They should be allowed a vote on the final deal and a chance to exit from Brexit.”
Labour MP Chris Leslie said: “Devastating impact on incomes, jobs and ultimately for the revenues we need for NHS & public services - hitting Midlands, north and Northern Ireland especially hard.
“The public have a right to know, and a right to reverse this if they wish. Nothing need be inevitable.”
Another Labour MP and Remain supporter, Chuka Umunna, said: “The Government’s own analysis of the economic hit to GDP from a ‘no deal’ Brexit would be 16% to North East England and 12% to Northern Ireland - and still Tory Brextremists agitate for this! Devastating stuff.”
The leak came as MPs were believed to have been seen the assessments in private sessions in the House of Commons on Wednesday.
In Commons on Wednesday, the SNP’s Stephen Gethins appeared to confirm the 12% figure for Northern Ireland in a question to Northern Ireland Secretary, Karen Bradley.
He asked her: “The Scottish Government analysis has shown that a ‘no deal’ scenario could cost Scotland up to 8.5% of GDP.
“Government analysis suggests that Northern Ireland could be cost up to 12% of its GDP.
“Does she believe any analysis she has seen? And is this too high a price to pay to stop a Tory civil war breaking out?”
A Government spokesperson said: “This document does not represent Government policy and does not consider the outcome we are seeking in the negotiations.
“As Ministers clearly set out in the House, this is provisional internal analysis, part of a broad ongoing programme of analysis, and further work is in progress.
“We are seeking an unprecedented, comprehensive and ambitious economic partnership - one that works for all parts of the UK. We are not expecting a ‘no deal’ scenario.”