Question to the Department for Business, Energy and Industrial Strategy:

To ask Her Majesty's Government what assessment they have made of the impact of a disorderly Brexit on UK business productivity.

The Government’s Long-term Economic Analysis of EU Exit (November 2018) provides a publicly available assessment of the possible long-term economic impacts of the UK's future relationship with the EU under different scenarios including a no deal scenario. The analysis summarises theory and evidence that openness to trade can increase productivity and long-term growth by exposing firms to competition, best practice, new technologies and through investment. This can contribute to higher wages, employment and households' living standards. A reduction in trade volumes between countries would be expected to lower productivity and long-term growth. In the Government’s analysis a no deal scenario is estimated to lower long-run GDP by 9% to 6% compared with today’s arrangements. In the analysis, this reflects the combined impact of trade frictions which reduce trade and affect firms' gross output, their productivity and households' purchasing power.

The Bank of England’s EU Withdrawal Scenarios and Monetary and Financial Stability report (published November 2018) also found that openness to trade affects productivity. The report’s disorderly exit scenario found a ‘large’ reduction in productivity.

These analyses are scenarios not forecasts. The scenarios illustrate what could happen under a range of key assumptions.