The COVID-19 pandemic and a failure to secure a post-Brexit trade deal with the European Union (EU) may jointly cost the United Kingdom around $174 billion each year in lost gross domestic product (GDP) for a decade, according to research by law firm Baker McKenzie, which said the pandemic will cut UK GDP by 2.2 per cent below the levels anticipated before the outbreak.
Prime Minister Boris Johnson has set a October 15 deadline for clinching a post-Brexit trade deal, which would become operational once the United Kingdom leaves informal EU membership at the end of this year.COVID-19 and a failure to secure a post-Brexit trade deal with the European Union could jointly cost the United Kingdom around $174 billion each year in lost gross domestic product (GDP) for a decade, according to research by law firm Baker McKenzie, which said the pandemic will cut UK GDP by 2.2 per cent below the levels anticipated before the outbreak.#
The report, titled ‘The Future of UK Trade: Merged Realities of Brexit and COVID-19’, said Brexit, even with a trade deal, would cut GDP by 3.1 per cent in the long-run relative to a hypothetical scenario where the United Kingdom remained in the EU, while exports of goods would be 6.3 per cent lower.
But without a trade deal, the cost of Brexit would increase to 3.9 per cent of GDP in the long run, Baker McKenzie said.
“Despite businesses taking steps to offset the added costs of Brexit by reconfiguring supply chains, the decline in export revenues for UK manufacturers will be substantial,” it said.
“With the costs of the UK’s departure from the EU likely to be very high, the government will need to use all the tools at its disposal to help mitigate the economic damage,” Baker McKenzie was quoted as saying by global newswires.
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