Dr Carmen Stoian from the Kent Business School responds to leaked documents showing the government expects all Brexit outcomes to have a negative impact on the UK economy.
‘It is not surprising that the leaked reports anticipate a negative impact of Brexit on almost every sector and every UK region, in every scenario. Although imperfect, the EU exists for a reason: to increase the prosperity of its member states through economic and political integration and reap the benefits associated with the freedom of movement of goods, services, capital and people that the membership of the Single Market entails.
‘Leaving the EU inevitably means forgoing some of these gains as a result of the increased barriers to trade and investment that are likely to occur in all possible scenarios. Whilst free trade with non-EU partners is likely to generate some economic growth, the UK’s geographical location, historical, economic, political and business links with the continent makes the EU the UK’s most logical and natural business partner. So no wonder that impact studies are finding that long-term economic growth will be affected negatively by Brexit, in all scenarios.
‘What is surprising is the Government’s determination not to share this information with the country. Firm managers need information about the health of the economy in order to make decisions about future investment, recruitment and resource allocation. Prospects of lower economic growth are likely to deter some firms from investing, thus leading to a vicious circle of low investment, low economic growth and yet lower investment.
‘Knowing these forecasts, some multinationals that are considering leaving the UK may need more government support for them to continue their operations and help plan to cover the impact of Brexit. Also, with lower prospects of economic growth, the budget is likely to suffer in the future, with fewer firms and people paying taxes. This may force the Government into making difficult decisions regarding expenditure priorities. Tackling the inequalities of the UK society and making Brexit a success may be more difficult, as the cost of Brexit may continue to mount.
‘So, after all, it is perhaps not surprising that the Government is trying to shield the country from all this information and the negative impact that those predictions may have on the UK’s economic growth in the future.’