Brexit could cost the UK up to 30 times more than it will gain back from striking a Trump trade deal

The UK government published its own assessment of the potential benefits of striking a post-Brexit trade deal with US President Donald Trump.

The analysis suggested a deal could increase the size of the UK economy by up to 0.16% over 15 years.

However, a UK government analysis from November 2018 suggested that leaving the European Union could shrink the economy by about 4.9% and up to 6.7% over the same period.

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Brexit could cost the UK economy up to 30 times as much as the country hopes to gain back from securing a new trade deal with US President Donald Trump, official figures suggest.

The UK’s Department for International Trade on Sunday evening published its objectives for talks with the Trump administration ahead of negotiations scheduled for later this month.

The department’s analysis estimated that an independent new trade deal with the US – possible only because of Brexit – would boost the UK economy by as much as £3.4 billion, or up to 0.16%, over the next 10 to 15 years.

However, this figure is dwarfed by estimates of the cost of Prime Minister Boris Johnson’s Brexit deal.

A UK government analysis published in November 2018 suggested that a modelled average free-trade agreement along the lines of Johnson’s planned deal with the European Union would reduce economic growth by about 4.9% and up to 6.7% over 15 years.

Foto: The UK government’s analyses of Johnson’s and Prime Minister Theresa May’s Brexit deals. Source: UK government

An analysis of Johnson’s deal published last year by the independent think tank UK in a Changing Europe forecast a 6.4% hit to per-capita GDP.

This means the cost of Brexit could be 30 times as big as the projected economic gain of a trade deal with the US.

Pro-Brexit figures in Johnson’s government have in the past questioned such forecasts. Conservative MPs accused former Chancellor Philip Hammond last year of being too gloomy when the Treasury revealed its analysis of how a new free trade deal with the US could benefit the UK economy.

However, the latest analysis of a trade deal with the US is pretty much in line with previous government projections.

David Henig, a former UK trade official, said on Monday said that the projection matched past analyses of the effect on the UK of a trade deal between the EU and the US.

Henig, the UK director at the European Centre for International Political Economy, told Business Insider that it was „in line with“ Transatlantic Trade and Investment Partnership forecasts, approximately „0.1% of GDP from a modest deal.“

Henig added: „These forecasts are based on the same models that suggested a much larger economic hit as a result of a shallow UK-EU deal.“

Naomi Smith, the CEO of the cross-party campaign Best for Britain, said: „It isn’t economically sensible to rip up all of our existing trade deals in order to pursue an arrangement with the US worth just a fraction of our trade with the EU.“

She added: „If the Government is serious about making a success of Brexit, it should start by ensuring we maintain the strong trading relationships we already have as part of the EU, rather than prioritising the relatively low benefits of a US trade deal.“