Economist disputes claim that Brexit deal could shrink UK economy

Research claiming that Theresa May’s Brexit deal could reduce Britain’s economy by up to 5.5 per cent over the next decade compared to staying in the EU has come under fire from a pro-Brexit economist.

Researchers at the London School of Economics, King’s College London and the Institute for Fiscal Studies said the withdrawal agreement could shrink UK GDP per person by between 1.9 per cent and 5.5 per cent.

The cost to public finances would be between 0.4 per cent and 1.8 per cent of GDP over the same timeframe, according to think tank The UK in a Changing Europe's report.

It comes the day after a separate report said the economy would be £100bn worse off under the Prime Minister’s deal.

However, Arbuthnot Banking Group economic advisor Ruth Lea told City A.M. that both studies were flawed, leaving many questions unanswered.

“These studies are barely worth the paper they are printed on, it is difficult to forecast 12 months ahead never mind 12 years," she said. "So many assumptions have to be made. Will we have Thatcherite or Corbynite policies? How successful will our trade deals be? Will there be radical tax and regulatory reforms or not? How is the world economy going to grow?"

She added: "One thing is pretty certain and that is the EU will be pretty slow-growing. I suppose this latest effort is all part of Project Fear 2.0.”