UK economy to shrink 3.5% under current Brexit deal: NIESR

The Institute says customs and regulatory barriers would hinder goods and services trade with the continent, leaving all regions of the United Kingdom worse off than they would be if the UK stayed in the EU.

NIESR estimates that the economy is already 2.5% smaller now than it would otherwise have been as a result of the 2016 Brexit vote.

As part of its research, NIESR says it "would not expect economic activity to be boosted" by the approval of the deal.

NIESR believes that loosened fiscal policy, together with the reduced likelihood of a no-deal Brexit and an expected cut in Bank Rate next year, will "support economic growth in the near term".

On the assumption that uncertainty persists but the terms of EU trade remain unchanged, the Institute forecasts economic growth of under 1.5% in 2019 and 2020, though the forecast is subject to significant uncertainty.

However it believes there is a 15% probability of output growth of less than zero per cent in 2020, reflecting the risk of a more severe global slowdown.