According to a secret analysis, a hard Brexit would cause £80 billion in lost public funds. Among the regions of the U.K. to be hardest hit in this case would be north-east England and West Midlands.
Heartland of Leave-Voters
A secret economic analysis from the British government itself will cause some of the most harm to a region of the country that voted to leave. If Brexit occurs without a deal, it would punch a hole £80 billion wide into public finances. The analysis showed that the most harm would come to north-east England and West Midland, areas where most residents voted to leave.
The Guardian published a report on what it discovered from secret papers that summarized an assessment of the economic impact of the U.K.’s exit from the European Union. Those papers suggested that if Brexit occurs without any deal at all with the E.U., the government will be required to take on a debt of £120 billion more over the next decade and a half.
Economic Impact
The report looked specifically at various parts of the country. It showed that the north-east of England would be socked with a 16 percent drop in regional economic growth. The West Midlands would face similar economic harm at a 13 percent reduction. Furthermore, retail prices would rise by 21 percent overall. Food and drink costs specifically would become 17 percent higher.
There will be a £40 billion mitigation of all the additional borrowing costs that result from leaving the European Union. This includes the £11 billion in saved payments for participating in the E.U. That would leave £80 billion in net costs to the country. Of that £80 billion total, £55 billion is the result of non-tariff barrier costs . That would include costs associated with quotas and regulatory divergence.
Previous Leaks of the Documents
These details from more local media about the secret government research arrived after the papers had already been leaked to Buzzfeed the week before. They determined that Brexit would produce a more difficult situation for the United Kingdom in all three of the different potential scenarios that it considered, including: no deal with the E.U., single market access, and a comprehensive free trade deal.