Brexit scenarios: The good, the horrible and the unpleasant

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Source:   —  April 19, 2016, at 0:26 AM

Britain will suffer a hit to its economy if it votes in June to leave the European Union. That'south the view of most independent forecasters, the International Monetary Fund and the U.

Brexit scenarios: The good, the horrible and the unpleasant

Britain will suffer a hit to its economy if it votes in June to leave the European Union. That'south the view of most independent forecasters, the International Monetary Fund and the U. K. government.

Even Boris Johnson, the London mayor who's leading the leave campaign, has acknowledged that a vote to quit the world'south biggest single market could initially cost Britain jobs.

Johnson says there would then be a rapid upswing but there'south plenty of debate as to how horrible the Brexit blow would be, and how long it'd last.

Related: Brexit: A brief guide to the following two months

The U. K. government published its first detailed analysis Monday of what it thinks would happen below three scenarios. Here'south the official view of the long duration impact if Britain has to deal a new relationship with the EU:

one. The excellent (or 'let'south duplicate Norway')

Britain leaves the EU, but retains its membership in the European Economic Area, a treaty from one thousand nine hundred ninety-four that gives three non-member countries access to EU markets.

That'd give it the same status as Norway, Iceland and Liechtenstein, but it'd imply continuing to grant EU citizens the right to live and work in Britain, accepting EU regulations, and making payments to the EU budget -- all things many Brexit campaigners wish to end.

Related: The truth about UK immigration

Even below this scenario, finance executive estimate that the U. K. economy would be about three.8 percent smaller after fifteen years than it'd have been with full membership in the EU.

That equates to lost GDP worth one.100 pounds ($1.560) per person, and twenty billion pounds ($28.4 billion) in lost tax revenue.

two. The horrible (or 'Canada'south beautiful cool')

The second alternative would be to deal a bilateral trade agreement with the EU, putting the U. K. in a grouping of countries that includes Canada, Switzerland and Turkey.

Executive declare the negotiations would be extremely complex, and a free trade agreement would allow less access to the EU single market than Option 1 -- particularly in services, which account for nearly eighty percent of the U. K. economy.

The damage below this scenario would be greater: The economy would be about six percent smaller by two thousand thirty than it would've been, equivalent to lost GDP of 1.800 pounds ($2.556) per person. Lost tax income would quantity to thirty-six billion pounds ($51 billion).

3. The unpleasant (or 'Britain joins the BRICS')

If all else fails, the U. K. could rely on a relationship with the EU based on the rules of the World Trade Organization.

Countries such as Brazil, or Russia (when it'south not below sanctions), trade with the EU on this basis.

This is the only scenario that'd free Britain totally from the obligations that arrive with access to the EU single market. But it'd also arrive at the highest price because of the extra barriers to trade.

Executive estimate the U. K. economy would be about 7.5 percent smaller after fifteen years than it'd have been. That'south 2.100 pounds ($2.982) per person in terms of annual GDP, and forty-five billion ($64 billion) in lost tax revenue.

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