CBI warn EU Exit would be ‘shock’ to UK economy

A new report commissioned by the CBI has warned that the UK leaving the EU would cause a “serious shock” to the UK economy.

The CBI commissioned accountancy company PwC to produce a report examining two different Brexit scenarios: an optimistic analysis and the other that anticipates difficulty concluding trade negotiations but with deals eventually reaching conclusion.

The first ‘FTA’ scenario has the UK negotiating a Free Trade Agreement (FTA with the European Union with this and other issues resolved within five years of the referendum.

The second ‘WTO’ scenario would present a more difficult negotiating environment with business between the UK and the EU being conducted under World Trade Organisation (WTO) rules.

Both scenarios revealed reductions in living standards, GDP and employment when compared with opting to say within the EU. The report suggests that by 2020, the cost to the UK economy could be as much as £100Bn, the equivalent of around five per cent of GDP.

Even in the optimistic scenario where agreements are reached quickly, GDP could still fall as much as three per cent by the end of the decade.

Carolyn Fairbairn, CBI Director-General, said: “This analysis shows very clearly why leaving the European Union would be a real blow for living standards, jobs and growth.

“The savings from reduced EU budget contributions and regulation are greatly outweighed by the negative impact on trade and investment. Even in the best case this would cause a serious shock to the UK economy.”

The report follows the CBI’s announcement that it had strong backing from its members to throw its weight behind the campaign to remain in the EU.

Brexit campaigners have disagreed with the findings with Vote Leave Chief Executive, Matthew Elliott, describing the CBI’s scenarios as “skewed” and member of Vote Leave’s campaign committee, Alan Halsall, disputing the claim an optimistic conclusion to trade negotiations could take as long as five years.

Mr Elliott commented: “If we want to take back control and strike the kind of free trade deal the CBI refuses to even consider, the only safe option is to Vote Leave.”

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