A study commissioned by London Mayor Sadiq Khan revealed that if Prime Minister Theresa May fails to secure a deal when the United Kingdom leaves the European Union in 2019, the country would be dealt with serious economic repercussions including the loss of an estimated 482,000 jobs.
Cambridge Econometrics which conducted the study used a forecasting model which broke down the effects of five different Brexit scenarios. The study then identified the potential economic impact of each scenario on nine key industries including construction and finance.
Every potential outcome from each scenario arrived at the same conclusion: no deal for Brexit would wreak damage on the U.K’s economy. The situation will get progressively worse the more distance is created between the U.K’s current and future trading agreements with the E.U.
Mayor Khan said the government should take the results of the study seriously:
“It’s crucial the government understands the consequences of each scenario they’re considering with the EU. I want them to choose the best outcome for jobs, for investment and for economic output.”
According to the Cambridge study, another consequence that the U.K faces should May fail to get two-year transition agreement with the E.U would be a loss of an estimated $68 Billion in investments by 2030. It would ease job creation by 87,000 and bring in a decade of lower economic growth.
There are already signs of a slowdown in employment opportunities as pointed out by a survey conducted by recruitment firm Morgan McKinley. The survey showed that job openings in London’s financial industry declined by 52% in December which is the highest drop in the sector over the past three years.
On a year-to-year basis, the decline in job openings averaged 37% which foreshadowed the high probability businesses would relocate operations from London to other destinations such as Paris or Frankfurt.
Hakan Enver, Operations Director of Morgan McKinley noted the steep drop should be a cause of concern for the U.K:
“In December, the city is abuzz with holiday parties not hiring, so a drop is to be expected. But for it to be such a seismic drop is alarming.”
Prime Minister May said she had not read the report but shared her opinion that she will be able to achieve a good, workable deal with the E.U:
“I’m very clear that that is what we are working for.”
P.M May is scheduled to meet with financiers Goldman Sachs Group Inc., HSBC Holdings Plc and the London Stock Exchange Group Plc and come up with possible solutions to post-Brexit scenarios.
Meanwhile P.M May will resume negotiations with the EU in March.
The Cambridge report identified financial and professional services to be the worst hit sectors in the event May does not get a deal with the EU. Both sectors are estimated to see a decline of 119,000 jobs nationwide.
Mayor Khan disclosed that he commissioned the study after Brexit Secretary David Davis revealed last November the government did not conduct a detailed analysis of the potential effects of Brexit on different sectors of U.K’s economy.