A leaked government document suggests that the UK’s economy will grow more slowly outside the EU, no matter what deal is struck with Brussels.
The report, seen by BuzzFeed News, suggests UK economic growth would be 8 per cent lower than current forecasts in the coming years, if it leaves the EU with no deal and reverted to World Trade Organisation (WTO) rules.
It says growth would be 5 per cent lower if Britain negotiated a free trade deal and 2 per cent lower even if the UK were to continue to adhere to the rules of the single market.
All scenarios assume that Britain will strike a new deal with the US.
The government sources point out that the document has not modelled the effect of a bespoke deal covering trade and financial services, which the government is hoping for, and it does not attempt to anticipate the outcome of negotiations.
The Treasury is said to have contributed to the document but sources say it is part of a much wider range of work going on in Whitehall.
The source said: "An early draft of this next stage of analysis has looked at different off-the-shelf arrangements that currently exist as well as other external estimates.”
"It does not, however, set out or measure the details of our desired outcome - a new deep and special partnership with the EU - or predict the conclusions of the negotiations.”