A Brexit no deal would result in £16bn being wiped off the UK's GDP by the end of 2020 - but the impact on all other European countries, including Ireland would be much smaller - a new report claims.
If Brexit negotiations were to break down, the UK would face "a significant increase in trade disruption" from March 2019, even if some "basic trading arrangements" were put in place, Oxford Economics' study concludes.
In the event of a cliff edge scenario, the UK's GDP would be two per cent lower by the end of 2020 compared with current expectations, equivalent to £16bn.
It would also result in a 3.1 per cent rise in the cost of importing goods from the EU, while the bloc would pay 3.5 per cent more for UK exports. For the UK, this will apply to roughly 60 per cent of its goods exports and imports, but for all EU countries except Ireland the share would be less than 10 per cent.
"The additional trade frictions would knock around one percentage point a year off UK GDP growth in 2019 and 2020, resulting in a period of very weak growth," the report claims. "The risks to this scenario are skewed to the downside – a slump in confidence or failure to establish the necessary customs infrastructure in time could easily generate a worse outcome."
The report adds that the argument we could "simply walk away" from Brexit talks and revert to WTO rules in order to trade with the rest of the world is "deeply flawed".
"The UK would need to re-establish more than 750 very complex international arrangements just to maintain the status quo," the report states. "We expect only the most critical issues – such as air travel – to be resolved by March 2019."