22nd Oct 2016

UK exit better than staying in unreformed EU, says report

  • London accounts for over a fifth of the UK's economy (Photo: Adolfo PM)

A UK exit is better than remaning in an un-reformed EU, according to an upcoming report commissioned by London mayor Boris Johnson.

But the report, drafted by Johnson’s chief economic adviser Gerard Lyons, also warns an exit could cost London over a million jobs if the City fails to set up new trade policies.

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The report set for publication on Wednesday looks at how the City’s economy could develop in the next twenty years under four different scenarios.

The best option is to stay with the EU if it reforms in line with the UK wishes. The second best is to leave but with new outward looking policies of its own in place to buffer job loss.

“The best economic scenario for Britain over the next 20 years is to be in a significantly reformed European Union,” Lyons told the Sunday Telegraph.

He noted a “very close second” option would be to leave the EU on good terms while “adopting sensible outward-looking trading policies”.

“Our detailed study shows it’s definitely a viable option for the UK to be outside the EU,” said Lyons.

The Sunday Telegraph cites figures in the report which indicate that London, at €440 billion, contributes to around a fifth of the UK’s gross domestic product (GDP).

It says London’s GDP would increase to around €800bn by 2034 should Britain stayed in a reformed EU.

An exit on good terms and outward-looking trade policies would boost it to around €770bn while the status quo would result in around €620bn over the next twenty years.

The worst-case scenario is to leave the EU without adopting any outward looking trade policies.

London’s projected growth by 2034, under this scenario, would be significantly less at around €540bn with over a million people in London possibly losing their jobs, reports The Financial Times.

The conservative mayor is set to back the conclusions in a speech on Wednesday on how to reform the EU to the benefit of London.

Johnson, in an a column in the Sunday Telegraph, noted the “costs of EU social policy, the stagnation of the EU economies, the continuing absurdities of some Brussels regulation” as reasons why the UK should leave the EU if it does not reform.

“As it happens, I have no doubt that we can lead the campaign for reform. But if we are going to succeed, we need to build on our alliances, and to appreciate how our friends on the continent see things,” he wrote.

The report comes ahead of British Prime Minister David Cameron promised 2017 EU referendum should the conservatives win next year’s general election.

Cameron has promised to crackdown on unemployed EU migrants and so-called “benefit tourism”.

Cameron’s cabinet reshuffle last month is also seen by some as another indication the UK is distancing itself from the EU.

The move saw him nominate a junior minister for EU commissioner. His new foreign minister, Philip Hammond, has also advocated withdrawing from an unreformed EU.

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