EU exit would be a serious shock to the UK economy, CBI says

Speaking from London Business School CBI talks Brexit implications

CBI event cropped

Leaving the EU would cause a serious shock to the UK economy, according to the CBI’s Director-General Carolyn Fairburn who spoke earlier today from London Business School.

CBI Director-General, Carolyn Fairbairn, warned that leaving the EU would cause a serious shock to the UK economy, with a potential cost to UK GDP of £100 billion and 950,000 jobs by 2020. “Negative echoes”, she said, could last many years after that.

According to new PwC analysis for the CBI, an exit, even in a scenario where a Free Trade Agreement with the EU is rapidly secured, could see a 3% reduction in GDP by 2020. Carolyn Fairbairn, CBI Director-General, said: “This analysis shows very clearly why leaving the European Union would be a real blow for living standards, jobs and growth.

“The savings from reduced EU budget contributions and regulation are greatly outweighed by the negative impact on trade and investment. The economy would slowly recover over time, but never quite track back to where it would have been. Leaving the EU would mean a smaller economy in 2030.

“The findings from PwC’s independent study also explain why the majority of UK businesses are in favour of remaining within the European Union. Even under optimistic assumptions, an exit triggers serious economic disruption.”

Carolyn Fairburn was addressing an audience of senior business leaders, together with Rain Newton-Smith, CBI Economics Director.

Newton-Smith said: “Some see the fact that we import more from the EU than we export to it as proof that they need us more than we need them.

“But this ignores the fact that 45% of the UK’s exports go to the EU, it’s our biggest export market by far, compared to just 7% of total EU exports which come here. So while it may be in both sides’ interest to complete a trade deal [in the event of a UK exit], the balance of power would be far from equal.”

An independent ComRes survey of CBI members – whose members employ nearly 7million people, around one third of all private sector employees – found that 80% believe being part of the EU is best for their business. 77% said it was better for the UK economy as a whole.