As with all such forecasts, the assumptions and caveats matter. This one is admirably clear about them and I’ve picked out some of the most obviously important ones in this thread. 1/9
“Our study does not consider the one-time costs faced by government and business of adjusting to Brexit, nor does the model capture the sector-specific impact on deeply integrated UK-EU supply chains, such as on the automotive sector, which is likely to be negative.” [= big]. 2/9
“... the EU would treat the UK no worse than any other important trade partner with which it does not have a trade agreement in place. Our assumption is that the UK would be treated like the USA …” [US-EU have no FTA but 130+ 'micro-agreements' that wd need renegotiating]. 3/9
“It is our view that the strategic impact of a failure to reach a negotiated exit of the UK from the EU, could be profound. However, this was outside the scope of this report.” [Fair enough but, indeed, profound, not least on ability to reach deals with other countries]. 4/9
“The EU’s current FTAs stay in place. Both the UK and the REU honour outstanding liberalisation commitments vis-à-vis third parties under existing treaties and we assume that third parties do the same.” [Highly speculative and implausible given relative UK-EU market size]. 5/9
“We do not factor in the one-time costs of erecting a possible customs border control between Ireland and Northern Ireland.” [OK, but (ongoing) human, economic & political costs matter even more]. 6/9
“We do not account for sector-specific issues related to the Single Market such as the Passport issue for financial services and air transport issues.” [Which are likely to be huge given UK dependence on City and fact of being and island]. 7/9
“We do not incorporate a Brexit effect for movement of persons.” [Which is likely to be huge for an ageing society at de facto full employment]. 8/9
Overall, my reading of this report is that a no deal Brexit would not be too bad so long as we make assumptions which ignore most of its bad effects. 9/9
