"Leaked" analysis: would a Hard Brexit cost £66 billion?

Last updated: 13 Oct 2016

In brief

Claim

The Treasury has said that leaving the EU could lead to a drop in tax revenue of £66 billion.

Conclusion

These figures aren’t new. £66 billion is the top end of an estimate the Treasury published in April.

“Cabinet ministers are being warned that the Treasury could lose up to £66 billion a year in tax revenues under a “hard Brexit”, according to leaked government papers.”

The Times, 11 October 2016

“The Treasury came under fire yesterday after the publication of parts of draft cabinet committee papers that said revenues could drop by £66 billion.”

The Times, 12 October 2016

The figures behind the “leaks” aren’t new. They’re exactly the same as forecasts that the Treasury published in April.

Back then, the Treasury suggested that if the UK left the EU single market and relied on its membership of the World Trade Organisation, after 15 years the government would collect between £38 billion and £66 billion less in tax revenues each year than it would have done if it had remained in the EU. That’s because the economy would have grown less in size - and if people are making less money, they pay less in taxes.

Some people have called leaving the single market a ‘Hard Brexit’, although there’s no precise definition for what that means.

The estimated figures are big; £66 billion is just over half of what we spend on the NHS. But forecasts like these are not certain and never definitive. Other independent organisations have published similar forecasts and the Treasury’s analysis is one of the more severe assessments. Even though it hasn’t published any new analysis since April, its view is probably still similar because it’s about long term effects of leaving the EU.

 


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