Theresa May’s Brexit deal could cost UK economy £100bn, according to new research

Theresa May’s Brexit deal could cost the British economy £100bn, according to new figures.

Research carried out by the National Institute of Economic and Social research, commissioned by the People’s Vote campaign for a second referendum, said that the cost would be the equivalent of losing the economic output of the City of London.

It estimated that the loss is equivalent to three per cent in GDP per person, and even if the UK were to stay in a customs union or invoke the Irish backstop there would be a hit of 2 per cent per head.

According to the report the uncertainty caused by the 2016 referendum has already reduced GDP by about two per cent, compared to the estimated figure if Britain had voted to remain in the EU, the report said.

However, a no deal scenario would cost the country £140bn – a drop of five per cent in GDP – the report said.

“Our assessment is that trade with the EU, especially in services, will be more costly after Brexit,” it said.

“This is likely to have an adverse effect on living standards in the UK.”

Reacting on Twitter, Ruth Lea, economic adviser at Arbuthnot Banking Group, rubbished the report, adding: "More ludicrous long-term forecasts not worth the paper they're written on."

Economists for Free Trade, a pro-Brexit group of economists, predict that the UK economy would get a boost of up to £135bn a year by leaving the EU.

Professor Patrick Minford, the chair of Economists for Free Trade told City A.M: “This report echoes the Treasury and civil service's assumptions about border frictions upon any change in our relationship with the EU. These additional frictions could be border delays or supposed new standards. However, both are illegal under WTO rules.”

EU politicians backed May’s deal last night, and the Prime Minister now faces the challenge of drumming up the support of Parliament and the public before MPs vote on the agreement next month.

At a press conference, May warned that her deal was the “only one on the table” and that it would not be possible to renegotiate it with the EU.

"The British people don’t want to spend any more time arguing about Brexit. They want a good deal done that fulfils the vote and allows us to come together again as a country," she said.

Arlene Foster, head of the Democratic Unionist Party (DUP) that is propping up May’s minority government, told the BBC on Sunday that there were “no circumstances” in which her party would approve the deal.

In the unlikely event that the deal gets through parliament, the DUP would have to “review” its confidence and supply arrangement, Foster said.