Rabobank warns about the impact of Brexit on the UK economy
Leaving the European Union without a trade agreement would imply a cost for the UK reaching 18% of GDP growth by 2030, or 11,500 pounds per British worker.
"By comparison, negotiating a new free-trade agreement would cost the UK 12.5% of GDP growth by 2030, and 10% of GDP growth if the country was to undergo a soft Brexit. This equates to 9,500 pounds and 7,500 pounds per British worker respectively," according to Rabobank's statement.
Meanwhile, the impact of a hard Brexit on the European Union would reach 2% of its GDP growth by 2024. Furthermore, Rabobank says that the UK leaving the EU without a trade agreement will have a more significant impact on the Netherlands, compared to the other members of EU, because this country has a much closer trade relation with the UK. The Dutch would thus lose between 25 billion euros and 35 billion euros.
"If negotiations in Brussels result in a hard Brexit, UK GDP is expected to decline by -2.4% following its departure in 2019. However, if the UK and EU were to agree on a free-trade agreement, a GDP decline of -1.1% would be expected, and a -0.3% decline in a soft Brexit scenarios," the Rabobank's statement read.
Rabobank also warns that a hard Brexit will mean for the UK a two-year recession period immediately after 2029. There would also be a recession in the case of a soft Brexit scenario, but milder and much more short-lived.
When referring to the impact on the labour market, the Rabobank research shows an initial rise in unemployment figures, with a hard Brexit causing a jump from 4.6% in 2018 to 6.2% in 2020, but quickly returning to long-term structural unemployment levels. In a Bremain scenario, Rabobank would anticipate unemployment to be stable, hovering at just above 4%. In any Brexit scenario, long-term damage to the UK’s labour market is expected to be limited due to the dynamic nature of the UK labour market, with the research showing no indication that an exit from the European Union in any form will result in higher structural unemployment levels.
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