Impact on UK regions revealed in Brexit leak

7 February 2018, 15:24

North East England will suffer a 16% hit to GDP in the event of a 'no-deal' Brexit according to the Government's own analysis, Sky News can reveal.

It is the only region of England with a surplus in goods trade with the EU, and also has the highest per capita EU funding of any English region.

Voters in the North East overwhelmingly backed Brexit at the EU referendum in June 2016, while the West Midlands had the highest vote share for Leave.

In the analysis, the West Midlands is forecast to be the region hit second-worst by a no-deal Brexit, with an estimated 13% hit to GDP in such a scenario.

Meanwhile, Northern Ireland could face a GDP slump of 12% if Britain leaves the EU without a deal, the analysis shows.

Sky News can reveal the full regional breakdown of Whitehall's impact assessment of three different Brexit scenarios.

Parts of the study, titled the "EU Exit Analysis - Cross Whitehall Briefing", were previously leaked last week, prompting a furious row.

The paper looks at the possible hit to GDP over the next decade-and-a-half from Britain leaving the EU, compared with the UK remaining full members of the bloc.

Overall, the UK is predicted to suffer a 1.5% drop in GDP while remaining in the EU's single market via the European Economic Area (EEA), a 5% drop if it agrees a free trade deal, and an 8% drop if Britain leaves the EU without a deal and reverts to trading on World Trade Organisation terms.

The full regional breakdown is as follows:

London:

:: less than 1% drop in GDP (EEA membership)
:: 5% drop in GDP (free trade agreement)
:: 8% drop in GDP (WTO terms)

South West:

:: 1%
:: 2%
:: 5%

Yorkshire/Humber:

:: 1.5%
:: 4.5%
:: 7%

South East:

:: 1.5%
:: 5%
:: 7%

East of England:

:: 1.5%
:: 5%
:: 8%

East Midlands:

:: 1.5%
:: 5%
:: 8%

Scotland:

:: 2.5%
:: 6%
:: 9%

Wales:

:: 1.5%
:: 5%
:: 9%

North West:

:: 2.5%
:: 8%
:: 12%

Northern Ireland:

:: 2.5%
:: 8%
:: 12%

West Midlands:

:: 2.5%
:: 8%
:: 13%

North East:

:: 3.5%
:: 11%
:: 16%

It comes as a key Cabinet sub-committee tries to establish a common position on the next phase of Brexit negotiations, with top ministers due to discuss the Northern Ireland border on Wednesday.

Earlier, in the House of Commons, an MP appeared to confirm the estimated 12% hit to GDP in Northern Ireland in the event of a no-deal Brexit.

The SNP's Europe spokesperson, Stephen Gethins, asked Northern Ireland Secretary Karen Bradley: "The Scottish Government analysis has shown that a 'no-deal' scenario could cost Scotland up to 8.5% of GDP.

"Government analysis suggests that Northern Ireland could be cost up to 12% of its GDP.

"Does she believe any analysis she has seen? And is this too high a price to pay to stop a Tory civil war breaking out?"

In response, Mrs Bradley said Brexit Secretary David Davis had "dealt with the issues surrounding the leaked report".

"It is important to state that the UK Government wants to achieve a good deal for the UK that protects the economic integrity of the UK," she added.

The initial leak of the analysis, to website BuzzFeed, sparked claims from Tory Brexiteer Jacob Rees-Mogg that civil servants were "fiddling the figures" in order to influence Brexit policy.

The Government has distanced itself from the "provisional internal analysis", which MPs have now been allowed to read in full on a confidential basis.

A spokesperson said: "This document does not represent Government policy and does not consider the outcome we are seeking in the negotiations.

"As Ministers clearly set out in the House of Commons, this is provisional internal analysis, part of a broad ongoing programme of analysis, and further work is in progress.

"We are seeking an unprecedented, comprehensive and ambitious economic partnership - one that works for all parts of the UK.

"We are not expecting a no deal scenario."

In response to the full regional breakdown, Labour's shadow Brexit minister Paul Blomfield said: "These figures are further evidence of why the Tories must rethink their reckless approach to the Brexit negotiations.

"The final Brexit deal with the EU must work for every region and nation of the UK, protecting people's jobs and local economies.

"That is why Labour has been clear from the outset that the Government should seek a deal that retains the economic benefits of our current membership with the EU.

"Options for achieving that should not have been swept off the negotiating table, including being in a customs union with our largest trading partner."

The Liberal Democrats' Brexit spokesperson, Tom Brake, said: "This is a damning outlook for Britain.

"The Tories are putting everything on the line because they do not care about the lives and livelihoods of the people of the UK.

"The Government need to start being clear what they are fighting for. They are still keeping 'no deal' on the table despite how crippling it would be to the regional economy."