WellTax Blog


September 25, 2020

A study recently conducted by the Business School of Economics revealed that a no-deal could cost the UK more than the Covid-19 pandemic. The research speculates that a hard Brexit would be a further shock in an already critical situation and would cost even two or three times more than the losses caused by the lockdown and the various restrictive measures imposed in 2020.

The study argues that the economic crisis caused by the pandemic could be over in about 18 months, while the effects of a no-deal would negatively impact the British economy for about 15 years. In fact, Covid-19 has caused a reduction in GDP of over 20% in recent months, but already from the next quarter there should be a stabilization towards 1.7%. Instead, a no-deal could cause a reduction in GDP of 8% for the next 15 years, a figure that would be reduced to a loss of 4.9% if a free trade agreement is reached with the European Union.

In absolute values, it is expected that a no-deal could cost around 160 billion pounds of loss to the United Kingdom, while the loss caused by Covid-19 would amount to around 40 billion pounds.

If the spectrum of a no-deal becomes reality, the multiplication of bureaucratic aspects, in addition to the difficulty in hiring new workers from the European Union area, would cause serious obstacles to the United Kingdom and its ability to do business on its own territory. To this should also be added the not secondary aspect of the introduction of customs and duties on goods imported on British soil (for example, 10% for the automotive sector and up to 50% for the food sector).

The time still available to Boris Johnson to resolve this intricate situation is now only three months and new developments are expected in the coming weeks.

To stay up to date on the Brexit negotiations follow us on our social media (www.well-tax.com).


Photo by wuestenigel on Foter.com / CC BY

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