London will be less badly hit by Brexit than the rest of the UK according to new research commissioned by Mayor Sadiq Khan.
Commissioned last summer, the research examined the impact of various Brexit models:
- Scenario 1 – A ‘close to status quo’ scenario where the UK remains part of both of the single market and customs union
- Scenario 2 – A scenario where the UK remains part of the single market, but not the customs union.
- Scenario 3 – A scenario where the UK remains part of the customs union, but not the single market.
- Scenario 4 – A hard Brexit scenario in which trade between the UK and the EU falls under World Trade Organisation (WTO) rules with a two-year transition period from March 2019; and
- Scenario 5 – The same hard Brexit scenario but without a two-year transition period.
and found that across the country, up 500,000 fewer jobs could be created by 2030 in the event of the UK leaving the EU without a deal. Of these ‘lost jobs’, 87,000 would be in London.
However while the number of jobs created may be lower than under current arrangements, new jobs are expected to be created in most sectors under all scenarios:
While the analysis says London’s economic output could be as much as 2% lower than predicted under the status quo, it also suggests this would be below a national fall of between 3 per cent and 3.3 per cent lower.
Regardless of the Brexit model pursued, the research predicts “London’s GVA would still grow at a much faster rate than the UK’s total in all scenarios.
“This reflects that London has a higher concentration of higher-value sectors, which are able to recover from economic shocks more quickly. As a result, London is likely to account for an increasing share of the UK’s GVA.”
It also notes that while post-Brexit restrictions on immigration could reduce the number of overseas workers available to employers: “London residents who were unemployed or inactive may be employed following migration restrictions because there is less competition for jobs.
“As an extreme example, if every vacancy that would have been filled by a migrant from outside the UK is filled by a UK national, employment would be unchanged while population would shrink because the migrant never came.”
Last month the UK and EU reached agreement on the first phase of the Brexit talks and are expected to shortly begin discussions about the future trading relationship.
While many MPs and politicians across the political spectrum oppose the move, ministers have committed to leaving the EU’s single market and customs union saying that to do otherwise would prevent them from controlling immigration, seen as a major driver of the Leave vote.
Mr Khan has repeated his calls for this approach to be rethought, saying: “If the Government continue to mishandle the negotiations we could be heading for a lost decade of lower growth and lower employment.
“The analysis concludes that the harder the Brexit we end up with, the bigger the potential impact on jobs, growth and living standards.
“Ministers are fast running out of time to turn the negotiations around. A “no deal” hard Brexit is still a very real risk – the worst possible scenario.”
Conservatives on the London Assembly have dismissed today’s report as a “continuation” of the Mayor’s “widely-publicised anti-Brexit views.”
Gareth Bacon AM said: “The fact is, the economic collapse that Remainers like Sadiq Khan predicted would happen immediately after the referendum, has not occurred.
“The government and the European Union are engaged in long and complicated negotiations and, until the outcome is known, this is merely scaremongering and speculation.”