English to Polish Bus/Financial Economics Brexit

Theresa May: UK left the EU to embrace the world
Last week Theresa May revealed that the Government expects to pull the UK out of the single market and customs union and establish a free-trade deal with the rest of the European Union instead.

In a note to clients, Rob Wood, chief UK economist at the Bank of America, stressed that there was inherent uncertainty over the long-term impact of such a Brexit, but said that "evidence suggests" the costs will be "of the order of 5-10 per cent of GDP over perhaps 15 years".

The charts that show how much May's Brexit will hurt economically
That view is broadly echoed by Kallum Pickering, UK economist of Berenberg bank, who estimates that lower migration, trade and investment between the UK and Europe due to Britain leaving the EU single market could reduce the UK's potential growth rate from 1.8 per cent per year from its pre-referendum rate of 2.2 per cent.

That implies a GDP loss due to Brexit by 2030 of roughly 5.5 per cent.

Likewise, Simon French, chief economist of the broker Panmure Gordon, expects Brexit to reduce the UK's trend growth rate from 2.3 per cent to 1.9 per cent from 2020 onwards.

That also implies a hit to GDP of around 5 per cent.

"This mainly hinges on a reduction in long-term net migration to 105,000 a year and sustained trade diversion through non-tariff barrier differentiation and heightened administrative burdens from a loss of customs union," Mr French said.

The City economists' estimates are in line with those of the Treasury's pre-referendum forecast for the damage of a Brexit in which the UK manages to establish a basic Canada-style free-trade deal with the rest of the EU.

This predicted a 6.2 per cent hit to GDP by 2030.

Other independent forecasts from the likes of the National Institute of Economic and Social Research (Niesr), the accountancy firm PwC and the consultancy Oxford Economics of such a scenario were for a smaller-impact GDP, although they were all still negative.