Brussels, 20/03/2015 (Agence Europe) - Leaving the European Union could cost the UK economy up to 2.2% off its GDP by 2030, unless the country manages to open up more trade flows and accept more migrant workers from the rest of the world, according to the think tank Open Europe in a new publication dated Monday 23 March.
Open Europe has studied four exit scenarios: the worst would lead to a loss of 2.2% of its GDP by 2030 for the United Kingdom (which, under this estimation, would leave on 1 January 2018), which its free-trade agreements with its traditional partners would not be enough to offset, Open Europe estimates, and the best would lead to an increase in GDP of 1.6% by 2030. This increase would be based on a free-trade agreement with Europe alongside very considerable deregulation of the British economy and a virtually total opening-up to trade with the rest of the world. In such a scenario, however, British workers would face competition from countries with lower costs, according to the think tank.
However, the most likely hypotheses would by no means be dramatic either way, Open Europe adds. The 'Brexit' may lead to just a permanent loss of 0.8% from its GDP by 2030 (if London negotiates a free-trade agreement with the EU and does nothing else), or an increase of 0.6% of GDP if the United Kingdom followed a policy of a free-trade agreement with the EU and the rest of the world and pursued a policy of deregulation.
“Brexit is unlikely to be the cataclysmic event some have claimed”, Open Europe insists, but adds that although transforming Britain into the deregulated, free-trading economy it would need to become outside the EU sounds easy in theory, “in practice it could come up against some serious political resistance within the UK itself”, the think tank warns. It believes that the worst scenario would arise if the UK left the EU and then pursued protectionist policies. (Solenn Paulic)