Brussels, 27/04/2016 (Agence Europe) - On Wednesday 27 April, the Organisation for Economic Co-operation and Development OECD compared the permanent consequences of the United Kingdom leaving the EU (Brexit) to a tax on households, as it would bring about ongoing and rising costs to the country's economy.
“Instead of funding public services, this tax would be a pure deadweight loss”, commented the Secretary General of the OECD, Angel Gurria, presenting his conclusions at the London School of Economics.
A Brexit would directly undermine confidence and would lead to uncertainty, which would have a downwards impact on GDP of 3% between now and 2020, according to the OECD's forecast. Under the worst-case scenario, Brexit would cost each household £5000 by 2030 and £3200 under the baseline scenario.
The United Kingdom would suffer not only from losing access to the single market, but would see new obstacles erected with certain third countries to which the country has preferential access due to its membership of the EU, and this would be the case “even if it succeeded in negotiating a new trade arrangement with Europe”. Such an agreement would be partial compensation for British trade up to 2023, but the cost of accessing the single market would still remain higher than it is today.
Among the other short-term consequences, the OECD listed capital drain and a greater appreciation of other currencies compared to the pound sterling. A weakened United Kingdom following the Brexit would reduce incentives to economic migration. On average, migrants have brought an increase in GDP of 0.7% since 2005, or nearly half of all GDP growth.
The OECD also argues that the net transfers to the EU budget are relatively small (0.3 to 0.4% of GDP per year in the coming years). However, what the UK would save would be more than offset by the impact of lower growth on its budgetary position. The OECD calculates that between now and 2019, the budgetary deficit would be an extra 0.9% of GDP. (Original version in French by Elodie Lamer)