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Brexit - followers will lose the most

12 Feb 2018 13:25|Marcin Lipka

“Those who voted for Brexit may feel cheated. Instead of savings on EU contributions, better health care and a lack of competition on the labor market, the threat of mass job loss and the worsening of the economic condition is emerging,” writes Marcin Lipka, Conotoxia Senior Analyst.

Heated debate about the impact of Brexit was revived in the United Kingdom after a secret government report on the effects of leaving the EU was revealed. According to the media, the report contains information that GDP may decrease by as much as 8%, compared to the scenario of the United Kingdom's stay in the EU. The most interesting thing, however, is that the regions which enthusiastically supported Brexit may incur the most severe losses.

Mystery atmosphere

The first secret report about Brexit was divulged by BuzzFeed. Later, the "Financial Times" began to lead journalist investigations into the effects of leaving the EU and reported that parliamentarians who have access to the study are under strict supervision while reading its content.

Information prepared by economists cooperating with the government is so sensitive, according to the current administration, that it should not fall into the hands of the partners with whom negotiations are being held. The general data from the report, however, do not surprise and coincide with previous analyses.

The GDP decline in the next 15 years related to Brexit will range from 2% to 8% compared to the scenario of staying in the EU. Depending on the closeness of future relations with the EU, the United Kingdom will also have to borrow from 20 to 80 billion pounds more during the considered period - according to the reports from the parliamentarians questioned by the Financial Times. The most important thing, however, is another fact. Significant losses will be primarily borne by the regions where votes for leaving the EU were predominate. Moreover, this information is readily available to the public.

Vote YES for Brexit? Prepare to lose the most

As part of the government's secret report, researchers from the University of Sussex published a study in which Michael Gasiorek, Ilona Serwicka and Alasdair Smith evaluated individual Brexit scenarios and their impact on the British industry. It is freely available online.

In the vast majority of cases, Brexit will increase prices, and reduce trade and employment. In the case of a "hard" Brexit, transport costs may increase by 9.8% and clothing by 6.1%. In turn, exporting processed food may be reduced by up to 38% and pharmaceutical products by more than 20%, if the relations between the United Kingdom and the EU are based on the the World Trade Organization (WTO) rules.

Less economic activity of industrial regions connected with regulatory and commercial difficulties also affect job losses.The most jobs (percentage-wise) may disappear in the Copeland constituency - over 10% of professionally active people. A significant reduction in employment is also to be observed in central England, "where Manufacturing Sectors are Vulnerable to Brexit," according to the study prepared by the University of Sussex.

The real paradox, however, may be the fact that these regions voted for Brexit. In the electoral district of Copeland, 64% espoused the EU exit. West Midlands is also seriously affected (including the city of Birmingham), where 59.3% voted against the EU. Apart from the job cuts, according to the Financial Times, the GDP of this county may be lower by up to 16% compared to the option of staying in the EU.

12 Feb 2018 13:25|Marcin Lipka

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