The British government and the Bank of England are set to step up their warnings on Wednesday of a big hit to the economy from a no-deal Brexit, potentially helping Prime Minister Theresa May tackle deep opposition to her plan.
Barely four months before Britain is due to leave the European Union, May has failed to get much of her own Conservative Party behind the agreement sealed with EU leaders on Sunday, leaving open the possibility of a no-deal Brexit.
BoE Governor Mark Carney and finance minister Philip Hammond have both previously stressed the importance of a transition period, as included in May’s plan, to ease Britain out of its four-decade membership of the EU.
Carney said last week that the impact of leaving the bloc without a transition could be akin to the 1970s oil crisis for the world’s fifth-biggest economy.
Finance minister Philip Hammond told BBC television on Wednesday that no Brexit option would be as good for the economy as staying in the EU, but May’s plan “delivers an outcome that is very close to the economic benefits of remaining in”.
The Daily Telegraph said Wednesday’s report from the government would show that in a scenario resembling May’s plan, Britain’s economy would be 1-2 percent smaller in 15 years’ time than if the country remained in the EU. But it would be 7.6 percent smaller if there is no deal.
The forecasts are likely to revive the protests from supporters of a more definitive break from the EU who accused the government of trying to scare voters into remaining in the EU ahead of the 2016 Brexit referendum.