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<p>The Government’s Long-term Economic Analysis of EU Exit (November 2018) provides
a publicly available assessment of the possible long-term economic impacts of the
UK's future relationship with the EU under different scenarios including a no deal
scenario. The analysis summarises theory and evidence that openness to trade can increase
productivity and long-term growth by exposing firms to competition, best practice,
new technologies and through investment. This can contribute to higher wages, employment
and households' living standards. A reduction in trade volumes between countries would
be expected to lower productivity and long-term growth. In the Government’s analysis
a no deal scenario is estimated to lower long-run GDP by 9% to 6% compared with today’s
arrangements. In the analysis, this reflects the combined impact of trade frictions
which reduce trade and affect firms' gross output, their productivity and households'
purchasing power.</p><p>The Bank of England’s EU Withdrawal Scenarios and Monetary
and Financial Stability report (published November 2018) also found that openness
to trade affects productivity. The report’s disorderly exit scenario found a ‘large’
reduction in productivity.</p><p>These analyses are scenarios not forecasts. The scenarios
illustrate what could happen under a range of key assumptions.</p>
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