New analysis finds Brits would be £800 a year worse off under customs union Brexit deal
Brits would each be £800 a year worse off if the UK remained in a customs union after Brexit, according to new analysis.
The National Institute of Economic and Social Research (NIESR) found that the proposal, which is being pushed by Labour, would hit Britain’s national income by £80bn a year.
The Treasury’s tax revenue would also be reduced by £26bn as migration levels fell, they say, while lower demand for public services would cut the money available to them by £13bn each year.
Reports over the weekend suggested the Theresa May was willing to offer Labour a “temporary customs union” lasting until the next general election in return for their MPs backing her Brexit deal.
But the pro-EU People's Vote campaign, which theo commissioned the NIESR research, said it proved the plan would be a "mistake".
The analysis found that the UK economy would shrink by 3.1%, with an exit from the EU single market presenting higher barriers to trade in services and on the assumption that net inward migration would go down.
The thinktank say the shortfall would need to be met by an increase in the basic rate of income tax, higher public borrowing, or public service cuts.
Labour MP and People’s Vote campaigner Rachel Reeves, said: “A customs union deal is not as damaging for our economy than a no deal Brexit.
“But it is a mistake to regard it as a soft option – let alone a fix-all for a political crisis that has its roots in promises that can’t be met, real costs that have been ignored and the reality that there is no stable majority in Parliament or a lasting settlement in the country without this going back to the people in a new public vote."
Garry Young, the director of macromodelling and forecasting for the NIESR, said: “Leaving the EU for a customs union will make it more costly for the UK to trade with a large market on our doorstep, particularly in services which make up 80 per cent of our economy.
“This inevitably will have economic costs, with widespread implications. We estimate that all regions will be adversely affected and that there will be fewer resources available to pay for public services.”