A no-deal Brexit could cause the UK to lose half a million jobs and nearly £50bn in investment by 2030, according to an economic forecast commissioned by the mayor of London, Sadiq Khan.
The report, which models five possible scenarios for leaving the EU ranging from a near-status quo situation to leaving on World Trade Organisation terms without any transition agreement, warns that the worst option could be a “lost decade” of economic slump.
The analysis by Cambridge Econometrics predicts that a no-deal Brexit could shed as many as 87,000 jobs in London alone, with the capital’s economic output 2% lower in 2030 than what would be expected under a soft Brexit.
“If the government continue to mishandle the negotiations we could be heading for a lost decade of lower growth and lower employment,” Khan said. “The analysis concludes that the harder the Brexit we end up with, the bigger the potential impact on jobs, growth and living standards.”
The Labour mayor was a strong supporter of the remain campaign and has since vigorously argued for the UK to stay in the EU’s single market and customs union, or for London to be granted its own deal, especially on maintaining rules on banking and financial services.
The report concludes that while every Brexit outcome would harm the UK economy, “the harder the Brexit, the more severe the economic damage could be”.
It says that while London would suffer in a no-deal departure, it would fare better than the rest of the UK – nationally, the most damaging sort of Brexit would see economic output up to 3.3% lower in 2030 than would be the case with the status quo, which would widen inequalities.
Khan commissioned the report after the Brexit secretary, David Davis, told MPs he had not, as long believed, ordered central government impact assessments into the potential economic effects of Brexit.
Khan said it was “astonishing” that Theresa May’s government had failed to do any analyses.