No-Deal Brexit Could Cost U.K. $500 Million in Lost Tax Annually (1)

The U.K. estimates that leaving the EU without a customs deal in place could cost 400 million pounds ($512 million) tax loss annually for the government.

The figures are the first public estimation by the government of the economic impact that different post-Brexit scenarios could have on the U.K.’s future economy.

The white paper, released Nov. 28, also sees the U.K. government admitting for the first time that all forms of Brexit will leave the U.K. worse-off economically.

It comes as Prime Minister Theresa May travels to Northern Ireland, Wales and Scotland this week to promote the Nov. 14 withdrawal agreement her government negotiated.

“These forecasts paint a bleak picture over the long-term of a no-deal Brexit or a Canada-style deal. It surely puts to bed some of the more far-fetched ideas that a hard landing Brexit will not seriously hurt the economy,” said Rain Newton-Smith, chief economist of the Confederation of British Industry (CBI), the U.K.'s largest industry body representing 190,000 businesses.

But despite the gloomy figures, the government was quick to use the impact analysis to support the withdrawal agreement.

“The analysis shows that the outcomes for the proposed future UK-EU relationship would deliver significantly higher economic output, around 7 percentage points higher than the no deal scenario,” said Mel Stride, financial secretary to the Her Majesty’s Treasury.

The government assessed a no-deal scenario, where the U.K. failed to reach a customs and trade agreement with the European Union, could wipe 10.7 percent off the U.K.'s GDP over the next 15 years.

(Updated with additional reporting throughout.)