Brexit to cause ‘£100bn shock to UK economy’

Leaving the EU could cost the UK economy £100 billion and 950,000 jobs by 2020, according to business organisation the CBI.

The forecast will be outlined by the business lobby group’s director general, Carolyn Fairbairn, at a speech at the London Business School.

The report examined two different exit scenarios, one at the optimistic end of the range, and the other recognising the likelihood of trade deals being concluded.

In the latter scenario, in which a favourable free-trade deal between the UK and EU is not agreed swiftly, it found that “negative echoes” could last for years.

In that case, the forecast shows that UK GDP could be 5.5 per cent smaller (around £100bn in today’s money) by 2020.

Even in a scenario where a Free Trade Agreement with the EU is secured rapidly, the analysis indicates GDP could be three percent lower by 2020. GDP per household in 2020 could be between £2,100 and £3,700 lower, and the UK’s unemployment rate between 2 and 3 percentage points higher, than if the UK had remained in the EU.

The CBI report has already angered Brexit campaigners who dismissed the findings as “scare stories” and claimed the “only safe option is to Vote Leave”.

But Lucy Thomas, deputy director of the Stronger In campaign, said: “This report is yet another clear indicator of the dangerous gamble that leaving Europe would be for people’s jobs, prices in the shops and Britain’s economy.”

CBI chief Carolyn Fairbairn will present the report later today saying it shows “very clearly” why leaving the European Union would be “a real blow for living standards, jobs and growth”.

The report is the latest major intervention from the CBI in the referendum campaign. A survey of 773 CBI members released earlier this month showed that 80 per cent were in favour of staying in the EU bloc. Five per cent thought it would be in their firm’s interests to leave, while 15 per cent were unsure.

The CBI director-general will give the economics lecture to senior business leaders, alongside Rain Newton-Smith, CBI Economics Director.

On the prospects of securing a deal with the EU, Rain Newton-Smith, will say: “A process for leaving is set out in Article 50 of the Lisbon Treaty, but it’s worth saying that Article 50 has never been triggered. By choosing this path the UK would be taking unprecedented action.”