Theresa May’s Brexit “war cabinet” will meet again on Thursday against a backdrop of official forecasts showing the regions and sectors of the economy which face being hardest-hit by withdrawing from the European Union.
The British prime minister sought to ease Tory tensions over her approach by insisting she had “no doubts” about her plan for a new relationship with Brussels. At a lavish black-tie event, Mrs May said she had an “ambitious” vision for the UK after Brexit.
At the Tory party’s annual Black and White Ball in London, Mrs May told the assembled donors, celebrities and politicians: “Ever since the British people delivered their vote in the referendum, I have had no doubts about what our new relationship with the EU must mean for the United Kingdom.
“It will mean taking control of our money – so we are not sending vast annual subscriptions to the EU.
“It also means control of our borders – so we decide on our own immigration policy; one which attracts the brightest and the best to come to these shores, and one which also ensures we are investing in our own talent here at home.
“And it means control of our laws – so British courts are supreme and the European Court of Justice no longer overrules them.” She stressed her plan would mean leaving the single market and customs union but “constructing a completely new trading partnership with the EU”.
But her comments came as impact studies released to MPs by the Government revealed the north east of England and West Midlands will sustain the biggest hit to economic growth from Brexit. London will take the least damage, according to the controversial forecasts which ministers were forced to release after they were leaked to the media and amid pressure from Labour and pro-EU Tories.
MPs have been reading the documents, which were prepared by the Department for Exiting the EU, under controlled conditions, but the figures have been leaked. Meanwhile, Sky News also obtained official estimates of the potential impact of non-tariff barriers – such as extra red tape, customs checks and rules of origin regulations – on various economic sectors.
The motor industry faces cost increases of between 5% and 13%, while the retail and wholesale industry could see costs rise by between 7% and 20%. The economically important financial services sector stands to suffer a 5% to 10% cost increase, but construction faces no extra costs.
The potential impact on automotive manufacturers could cause concerns as Mrs May prepares to host a meeting with Japanese business leaders on Thursday – including representatives from the country’s motor industry.
The leaked figures have been seized upon by backers of a “soft” Brexit to protect the economy.
But officials said they did not show the impact of the Government’s preferred post-Brexit option of an “unprecedented” economic partnership with the EU. Mrs May chaired the Brexit sub-committee on Wednesday and will do so again on Thursday to thrash out what kind of trade relationship the UK will seek in negotiations.
The leaked figures showed the north east would take an 11% hit to economic growth under a free trade deal with the EU, while leaving with no deal would result in a 16% dip, and staying in the single market would amount to a 3% decline.
In the West Midlands, a free trade deal would result in an 8% hit to growth, compared with 13% under “no deal”, and 2.5% if the UK stays in the single market. By comparison, London would sustain just a 2% hit to growth if the UK gets a free trade deal, 3.5% in a no deal scenario, and just 1% if the country stays in the single market.
Liberal Democrat Brexit spokesman Tom Brake said: “The Tories are putting everything on the line because they do not care about the lives and livelihoods of the people of the UK.” Labour MP Stephen Doughty, a leading supporter of the pro-EU Open Britain campaign, said: “People in every corner of the United Kingdom will be shocked to see the Government’s own assessment of the damage Brexit will do to their communities.”
Responding to the leaks, a Government spokesman said: “This document does not represent Government policy and does not consider the outcome we are seeking in the negotiations. “As ministers clearly set out in the House, this is provisional internal analysis, part of a broad ongoing programme of analysis, and further work is in progress.
“We are seeking an unprecedented, comprehensive and ambitious economic partnership – one that works for all parts of the UK. We are not expecting a no deal scenario.”