No-deal Brexit could hit UK economy harder than Covid in long term, says think-tank UK in a Changing Europe

Queues at the border, shortages of fresh food and medicine as well as more “hassle” travelling to the continent are also possible, according to the UK in a Changing Europe group.

A report by the organisation, based on modelling with the London School of Economics, said the impacts of coronavirus may mitigate or obscure the impact of a no-deal exit.

But it warned that not forming an agreement with Brussels would have a significant impact in the long term.

Professor Anand Menon, who grew up in Wakefield and is director of the UK in a Changing Europe, said: “While the Prime Minister said no deal is a ‘good outcome’ our report shows that it may lead to significant disruption and will have a significant negative economic impact. As significant will be the political fallout of no deal, particularly with the UK and EU, but also inside the UK, particularly Northern Ireland, and internationally too.”

The authors wrote: “The claim that the economic impacts of Covid-19 dwarf those of Brexit is almost certainly correct in the short term. Not even the most pessimistic scenarios suggest a no-deal Brexit would lead to a fall in output comparable to that seen in the second quarter of 2020.

“However - assuming a reasonably strong recovery, and that government policies succeed in avoiding persistent mass unemployment - in the long run, Brexit is likely to be more significant.

"Our modelling of the impact of a no-deal Brexit suggests that the total cost to the UK economy over the longer term will be two to three times as large as that implied by the Bank of England’s forecast for the impact of Covid-19.”

The transition period, which kept the UK aligned to the EU’s single market and customs union rules to allow trade to flow smoothly after Brexit, expires at the end of the year unless both sides agree to an extension .

Trade deal talks between the two sides are continuing, but the Prime Minister has set a deadline of October 15 for an agreement to be reached, otherwise he has said he will simply walk away from the negotiating table.