Brexit

Brexit could cause north's economy to shrink by 12%

The north's economy could shrink by 16% following Brexit, according to government figures. Picture by Brian Lawless, Press Association

BREXIT could cause the north's economy to shrink by up to 12%, according to British government figures.

Brexit impact studies released to MPs by the government reveal that the North East of England, West Midlands and Northern Ireland will sustain the biggest hit to economic growth from Britain's withdrawal from the European Union next year.

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.

The north will face an economic hit of 12% if no deal is agreed with the EU. A free trade deal will cause the economy to shrink by 8% and a deal to remain within a single market, seen as a 'soft Brexit' will lead to a 2.5% hit.

Director of the Confederation of British Industry Northern Ireland, Angela McGowan, warned that a no deal Brexit "would be equivalent to another financial crisis".

"Not seeing any economic upside to Brexit from Whitehall's analysis for NI," she tweeted.

No deal with the EU will leave North East with a 16% dip and the West Midlands with a 13% hit to growth.

By comparison, London would sustain just a 3.5% hit to growth in a no deal scenario.

Meanwhile, a key meeting of the government's Brexit 'war cabinet' yesterday was expected to focus on Northern Ireland and immigration.

Theresa May chaired the first of two key Brexit meetings with senior ministers as the government faces more calls to clarify the UK's position.

The Brexit cabinet committee is to discuss today what the future relationship between the UK and EU might look like.

The EU's chief Brexit negotiator Michel Barnier warned earlier this week he needs more clarity from Britain on what kind of economic relationship it wants with the bloc after it leaves.

Following a meeting with British Brexit Secretary David Davis, Mr Barnier said "the time has come to make a choice" as he warned of "unavoidable" trade barriers.

The cabinet committee meetings come as a leaked document suggested the EU wants to be able to restrict UK access to the single market if there is a dispute after Brexit.

According to a draft of the UK and EU's withdrawal agreement, the power to suspend "certain benefits" would apply during a transition phase after the UK leaves in March 2019.

Meanwhile, the European Court of Justice (ECJ) has been asked to consider whether Britons living in the 27 other EU member states can retain their rights as EU citizens following Brexit after a case was brought by expats in the Netherlands.

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