, 13 tweets, 4 min read
We have a BRAND NEW report out today modelling the economic impact of Boris Johnson’s Brexit proposals. The full report is here: ukandeu.ac.uk/wp-content/upl… But because I'm kind, here’s a quick thread summarising the findings 1/13
The main message of the report is that the long-term economic impact of the proposals are negative, and in fact worse than would be the case for the deal negotiated by Theresa May. The main differences between the two sets of proposals are set out in the table below. 2/13
We first look at the impact of the proposals in terms on trade on UK income per head. As the chart below shows, the impact is roughly equidistant between May’s deal and a WTO exit. Don’t pay too much attention to the £ figures - they’re just for context. 3/13
Next, we look at the interaction between reduced trade and productivity. The productivity impact would substantially increase the economic impacts, as the chart below shows. 4/13
Then, we looked at how migration might interact with these things. We considered two different scenarios: one restrictive and one liberal, and also with and without the associated impact on productivity. 5/13
Combining the trade and migration effects gives us the overall picture, as the chart below shows. Johnson’s proposals could be substantially more damaging in the long run than May’s deal, albeit possibly mitigated by migration policy. 6/13
Finally, we looked at how these impacts would translate into the government finances. Depending on the scenario, the effects range from roughly -£16bn per year (at current GDP) to -£49bn, as the chart below shows. 7/13
Overall, the economic impact of Mr Johnson’s proposals are substantially negative relative to the status quo of EU membership, and could have a worse impact than Theresa May’s deal, albeit a more liberal migration outlook could mitigate some economic damage. 8/13
Now for the caveats. We forecast the impact ten years after Brexit to allow time for the economy to adjust. Remember: economic models are not predictions. We don’t know exactly what form future relations will take and we don’t account for changes in, eg, investment. 9/13
We assumed Mrs Johnson’s deal implies a less comprehensive free trade agreement than the EU-Canada trade agreement. 10/13
This is partly because of his desire for a looser relationship than Mrs May foresaw, partly because, absent Level Playing Field measures, it is hard to see the EU allowing the UK to have a Canada type deal. 11/13
On migration, we assumed falls in EU migration in both scenarios, though more severe in the restrictive scenario, and increases in non-EU migration, though higher in the liberal scenario. There are more detailed on the precise assumptions in the report itself. 12/13
But the main point is have a look at the report itself. It's short, clear and looks at an aspect of the Johnson proposals that has been rather under-scrutinised to date. END
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