LONDON (AP) — A respected British think-tank on Wednesday harshly criticized the Brexit agreement reached by Prime Minister Boris Johnson, concluding that the British economy would be 3.5% smaller with that roadmap than if the nation remained in the European Union.The agreement would be a 70 billion pound ($90 billion) blow to the economy, according to a study published by the National Institute of Economic and Social Research.
«We don’t anticipate an increase in economic activity based on the government’s proposed Brexit agreement,» the institute said. Researchers based their forecast on the assumption that Britain would leave the bloc with a free trade agreement with the EU after a transition that would last until 2021, while negotiating new agreements with other countries.» Barriers to trade in goods and services and restrictions on migration» will lead to an economic downturn, experts said.
The British government said it was preparing a «more ambitious» trade deal than the institute considered.
The report indicates that a Brexit without agreement would do even greater damage to the economy, with a 5.6% reduction in gross domestic product. While British political leadership debates how and when the EU exits, the imminence of the date is already affecting the economy. Brexit, which was initially to occur in March, was then postponed until 31 October and has now been postponed again until the end of January. In the meantime, companies are changing their inventories, changing their supply chains and storing products in order to cushion any shockresulting from an EU exit, either with or without agreement. The institute estimated that the British economy would be 2.5% smaller than it would have been if the British had not decided to leave the EU in the referendum held in 2016.
The British government insists that the conditions of divorce will be different from those anticipated by the institute.
«Our goal is to negotiate a comprehensive free trade agreement with the European Union, which will be more ambitious than the standard free trade agreement used by the institute as a basis for its calculations,» the Treasury Department said in a statement. The study concluded that a Brexit without agreement will cause an even harder blow to the economy, subtracting 5.6% from GDP. Tom Brake, of the Democratic Liberals, claimed the study «is not surprising.» The Tories’ obsession with implementing Brexit at all costs is jeopardizing our future prosperity,» Brake said. «It is inconceivable that a government will voluntarily adopt a policy that will harm economic growth for years to come.»