Northern Ireland faces slump in growth if UK leaves EU without deal

Leaked Treasury document states that economic growth could decline by 12 per cent in the North over 15 years

Britain’s prime minister Theresa May: “The United Kingdom is leaving the European Union. That means we are leaving the single market and the customs union.” Photograph: AFP

Britain’s prime minister Theresa May: “The United Kingdom is leaving the European Union. That means we are leaving the single market and the customs union.” Photograph: AFP

 

Leaving the European Union with no deal would reduce economic growth in Northern Ireland by 12 per cent over 15 years, according to a leaked British government analysis. The document, which was leaked to Buzzfeed last week and shown to MPs on Wednesday, says Brexit will hurt the economy in Northern Ireland more than anywhere else in the UK apart from the northeast of England.

The analysis, which was produced by Treasury officials last month, predicts that Brexit with a free trade deal would reduce Northern Ireland’s economic growth by 8 per cent. Even if Britain remains in the single market, the North’s economic growth would be 2.5 per cent lower than if it remained in the EU.

The latest leak came as the British prime minister Theresa May met her Brexit “war cabinet” to discuss Ireland and immigration as the government seeks to agree an approach to the next phase of negotiations with the EU. The cabinet sub-committee includes Northern Ireland secretary Karen Bradley, along with the most senior Brexiteers and Remainers in the government.

In the House of Commons on Wednesday, the Scottish National Party’s Stephen Gethins asked Ms Bradley if the economic impact on Northern Ireland described in the leaked report was too high a price for containing a civil war in the Conservative Party. The Northern Ireland secretary also faced questions about progress towards ensuring that the Border remained frictionless.

“We speak regularly with our counterparts in the Irish Government on a range of issues. In the joint report agreed with the EU at the December European Council, we reached an agreement that will maintain the common travel area. We also agreed that any future arrangements agreed between the UK and the EU must be compatible with the UK government’s commitment to avoiding any physical infrastructure on the border between Northern Ireland and Ireland. We will continue working closely with the commission to agree a legally binding text for the commitments made in December,” she said.

London least affected

At prime minister’s questions, Labour’s Hilary Benn asked Ms May why she was determined to leave the customs union, a course he said was incompatible with keeping the Border open.

“The United Kingdom is leaving the European Union. That means that we are leaving the single market and the customs union. If we were a full member of the customs union, we would not be able to do trade deals around the rest of the world. And we are going to have an independent trade policy and do those deals,” the prime minister said.

The leaked government analysis suggests that the regions of England which voted most heavily to leave the EU will pay the greatest economic price for Brexit. The West Midlands, which had the biggest Brexit majority, will see its economic growth cut by 13 per cent over 15 years if Britain leaves without a deal, according to the report. The northeast, which also voted heavily for Brexit, would fare worst of all, taking a hit of 16 per cent with no deal and 11 per cent with a free trade deal.

The analysis suggests that London, which voted overwhelmingly to remain in the EU, will get off most lightly from Brexit, with growth reduced by just 3.5 per cent, even with no deal.