Catastrophic cost of Brexit on UK trade revealed in stark OBR warning

Brexit is on course to cut UK trade by 15 per cent, the government’s independent financial watchdog has warned.

Vote Leave campaigners argued that British trade would receive a boost from exiting the European Union in the run up to 2016’s referendum.

But in documents published alongside Rachel Reeves’ Budget the Office for Budget Responsibility (OBR) said that “weak growth in imports and exports over the medium term partly reflect the continuing impact of Brexit, which we expect to reduce the overall trade intensity of the UK economy by 15 per cent in the long term.”

The figures led to claims that Brexit was the “elephant in the chancellor’s study”.

The prime minister has said that he wants to reset the UK’s relationship with the EU, fixing it for the benefit of “generations to come”.

But Labour has specifically ruled out any return to the EU’s customs union or single market, despite calls to go further and faster with the plans, amid warnings over the cost of Brexit to the wider economy.

SNP MP Stephen Gethins said: “At a time when the chancellor is talking about deficits the OBR is releasing figures illustrating the appalling impact of Brexit. It has been devastating for our businesses, public sector and overall economy.

“Reversing, rather than embracing, a hard Tory Brexit, is the single biggest action the chancellor could take today to boost growth and the Treasury’s finances.”

Brexit is “elephant in the chancellor’s study”, he added.

Dr Mike Galsworthy, chair of European Movement UK campaign group, said: "These latest figures from the independent OBR on UK trade are just the latest confirmation of what we already knew. Brexit does not work for working people.

“It can’t be made to work, and can’t be forced to work. Red-tape is having a crippling impact on our economy, especially UK businesses with supply chains that depend on the EU. The government must capitalise on their reset of our relationship with Europe and deliver long-term stability for UK businesses.

He added: "It is now reckless to ignore the severe damage that continues to be done to the public finances. It has long been draining the financial and social wellbeing of every single one of us - and yet completely ignored as if it does not exist.

“This absurd situation has to end. We must now have a forward-facing public inquiry into the true cost of leaving the European Union and the possibilities for repairing the scandalous destruction that has been done."

The Treasury has been approached for comment.