Did the Treasury get it right? Putting a figure on the cost of a Brexit

The Treasury has released a report which analyses the economic impact of leaving the EU and estimates that it could lead to a 6.2% fall in GDP (£4,300 per household). In a briefing paper for the LSE’s Centre for Economic Performance, Swati Dhingra, Gianmarco Ottaviano, Thomas Sampson and John van Reenen analyse the report and conclude it is a serious contribution to the debate. Their major criticism is that the Treasury have been overly cautious in their assumptions for their central case (a negotiated bilateral agreement, like the Canadian trade deal) and the true long-run costs of a Brexit are likely to be higher than they estimate. In this extract, they address some of the criticisms made of the Treasury’s analysis.