Theresa May has been one busy person over the past couple of months – conceptualizing the terms and conditions of Brexit that’s bound to shape up UK’s future for the next couple of decades. After managing to outline the deal, she is now faced with the daunting task of passing it in the parliament. Until now, her deal has been unanimously laughed at by Members of the Parliament (MP’s) and opposed by members of her own conservative party. To add fire to the fuel, new economic forecasts have also predicted that May’s deal might propagate dire economic condition in the UK in the forthcoming years.
One of the forecasts was conducted by the Bank of England, which said that under May’s deal – described as a close economic partnership with Brussels – the British economy would be at least 1% smaller by 2024 than it would have been if it voted to remain in the EU back in May 2016. It also stated that if custom checks were introduced on UK-EU trade, the economy would further shrink by 0.75% over the same period. The Bank of England also performed a worst-case scenario prediction – simulating a “disorderly no-deal” Brexit. The results were even dire, as it predicted the economy would shrink by 8% and house prices would tumble by 30%, as the government would have to spike up the interest rates in order to combat inflation. The governor of Bank of England, Mark Carney, stated that, “Our job is not to hope for the best but to prepare for the worst.”
The next set of forecasts was conducted by Whitehall, who concluded that the UK would be significantly worse off under five possible Brexit scenarios in 15 years’ time. Officials did not produce a scenario that matched May’s deal exactly, but the two closest models suggested that the economy would be somewhere between 3.9% and 2.1% smaller in 2035-36 when compared with remaining in the EU. The Norway EEA scenario, preferred by May’s cabinet members, concluded that GDP would be 1.4% lower in 15 years’ time under May’s deal than it would have been if it remained in the EU. The Canada free trade model, one which is favored by hard Brexiters, showed that UK would be 6.7% worse off than remaining in the EU under a worst-case scenario.
The forecasts from both these analysts have sent shockwaves across Britain, who are now questioning their decision to leave EU. Chancellor Philip Hammond was quoted saying: “If you look at this purely from an economic point of view, yes there will be a cost to leaving the European Union because there will be impediments to our trade.”
Meanwhile, the Labor Party lead by Jeremy Corbyn put forward their own Brexit amendment while rejecting May’s deal. The party opposed May’s Brexit because she had failed to provide for a permanent customs union and a strong single-market deal. Corbyn stated that the deal would increase barriers to trade in goods and services, and would not protect workers’ rights and environmental standards. May meanwhile accused Corbyn of putting forward a plan that was shorter than her “weekend shopping list”, while stating that the country would be “better off with her deal” because the economy would still be growing.
If the Parliament votes down May’s deal on 11th December, it’s highly likely that a botched Brexit will take place – which will hamper the economy further. Under such circumstance, maybe May’s deal is the better of all evils that can result in the minimum negative effect.