The True Cost of BREXIT for the UK: A Research Note

The HM Treasury analysis (2016) of the long-term benefits of EU membership for the UK implicitly argues that the associated output loss of BREXIT is 10%, while Patrick Minford has argued that a 4% output increase could be expected. More recent analysis from Rabobank suggests an output loss of 18 % for the UK in the event of a 'no-deal' BREXIT. The subsequent rough estimate presented here shows that real national income is likely to fall by 16% in a no-deal BREXIT - where a 2% income gain from a possible US-UK transatlantic trade and investment partnership treaty and 1% gain resulting from zero tariffs on the import of agricultural products have been included. The cumulated income loss - based on a present value-analysis - is almost three times as large as the UK output decline during the Great Depression; however, the BREXIT-related output decline would be spread over a period of about 15 years. For the lower strata of society serious problems will emerge in such a setting; it is strange that the Remainers in the UK have almost no voice in terms of political party representation. As regards power in Brussels: based on Banzhaf values (game theory), the big countries in the EU will be the winners of BREXIT; even if Scotland joins later.