Each of the government’s four Brexit scenarios, including a bespoke deal, would leave Britain poorer and cost the taxpayer hundreds of millions of pounds each week, analysis has shown.
The study for the thinktank Global Future by Jonathan Portes, a professor of economics and public policy at King’s College, London, found that a bespoke deal, the government’s preferred option, would have a net negative fiscal impact of about £40bn a year.
Polling commissioned for study by Populus, which is run by David Cameron’s former strategy chief Andrew Cooper, found that voters, even those who backed Brexit, feared that leaving the European Union would come at “too high a price”.
The analysis came as the government braced itself for defeats in parliament on Wednesday, including over its plans to take the UK out of the customs union, as the EU withdrawal bill returns to the House of Lords.
Nine senior Conservatives, including two former cabinet ministers, are among those who have put their names to a series of cross-party amendments aimed at persuading Theresa May to rethink her position.
The amendment giving parliament a vote on staying in a customs union, which is almost certain to pass, would mean MPs will get a say on the contentious issue despite the government’s efforts to kick it into the long grass. The only way the prime minister will be able to avoid defeat will be to offer significant concessions.
The Global Future research is based on the government’s own impact studies on three different Brexit scenarios, but also examines a fourth option – a bespoke deal – using data from the official assessments along with details set out by the prime minister in her Mansion House speech.
It suggested that option would increase the cost of non-tariff barriers by £23bn over the status quo. Other costs – including customs barriers, divorce payments and ongoing contributions – would add another £38bn while limits on free movement would dent the economy by £6bn.
However, the analysis found that a bespoke deal could also bring in £27bn extra to the Treasury, including from customs revenue and EU budget savings. Overall, the net cost of the deal would be £40bn a year by 2033-34, or £615m a week in today’s prices.
After looking at all four options available to the prime minister, the study established that in the long-term, the amount of money available for spending on public services would fall. Under the so-called Norway option, there would be £262m less a week, under the Canada model it would be £877m, while under a no deal it would be £1.25bn.
This would mean 22% less funding available for the NHS if there was a bespoke deal, and 9%, 31% and 44% less under each of the other options.
A poll of 2,000 people for Global Future found they overwhelmingly thought all four possible deals – bespoke, remaining in the European Economic Area, a free trade agreement and crashing out onto World Trade Organization terms – were bad.
It also found that 72% of those who voted leave thought that £615m a week would be too high a price to pay for the bespoke deal; while 78% felt it was worse than they had hoped for when casting their vote in the EU referendum.
When forced to choose between the four scenarios described, more than half of all those polled – 51%– opted for the Norway-style deal, which has the least impact on public finances and trade, as well as the fewest additional controls of immigration. Leave voters also narrowly preferred this option – 37% compared with 36% who backed a bespoke deal.
Portes said: “If we are to decide what sort of Brexit we want, the least we need is a menu, with prices. The one we have prepared represents the government’s current best estimates. It’s up to us to decide which of these prices is worth paying.”