Tony Blair warns Brexit will cause long lasting pain for Britain’s economy

Brexit will inflict long-lasting pain for Britain’s economy, Tony Blair has warned.

Theresa’s May’s Chequers plan will inflict almost as much damage on Britain’s services sector as a no-deal Brexit, research has shown, with Tony Blair warning of long-lasting “pain” on the dominant industry.

An analysis carried out for the former prime minister’s Institute for Global Change said that crashing out and trading on World Trade Organisation (WTO) terms would see GDP 4.91% lower in 12 years’ time than if Britain remained in the customs union and single market.

Tony Blair warns Brexit will cause long lasting pain for Britain’s economy

Even Mrs May’s so-called Chequers deal would see GDP take a 4.13% hit, research carried out by the National Institute of Economic and Social Research (NIESR) suggests.

The impact on services from the WTO scenario would be 2.1%, double that of goods exports. The Chequers plan – which would keep Britain closer to the EU for goods but allow it more freedom over services – would leave it only marginally better with a 1.9% fall in GDP, it claims.

Blair told the Financial Times that services were “the forgotten part of the Brexit landscape”, saying: “Many people may think that though the short-term impact of Brexit will be severe, we will swiftly recover. This analysis demonstrates that this is not the case.

“The pain will go on for a long time and will only be reduced by radical measures of deregulation and cost saving to improve Britain’s competitive advantage with Europe, which run in precisely the opposite direction of the policies now advocated by both main political parties.”

The report – Brexit and the UK’s Services Trade – was released ahead of a London event hosted by Reuters that Blair, a vocal critic of Brexit, is due to speak at on Thursday.

The service sector of the economy, rather than goods, will bear the main brunt of Brexit, it suggests. Britain is a “hugely successful exporter of services”, it says, and while exports to the EU fell after the eurozone crisis, they rose in value from £70 billion to £110 billion between 2008 and 2017, an increase of 57%.

The report warns: “Much of the overall rise in British exports over the last 20 years has been in services – the performance of manufactured exports has been easily the worst in the G7.

“On current trends, services exports are likely to exceed goods exports within five years.

“The EU is by far the biggest market for these services, something that cannot be explained solely by geographic proximity and the EU’s market size.

“And leaving the EU’s single market will hit the UK’s services exports harder than its goods exports.”

The Labour MP Chris Leslie, a supporter of the People’s Vote campaign for a second Brexit referendum, said: “In a £2tn economy, losing the 0.4% of annual growth this report points to means throwing away over £150m a week. Nobody stuck that on the side of their bus.

Read More : Brexit : David Davis warns Tory party of ‘dire electoral consequences’ if Chequers plan continues

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