Pound plummets as hard Brexit set to hit treasury by £66bn per year

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TRADE-weighted sterling has hit an eight-year low of 74.0 as GBP/USD crashed past the $1.23 handle after a leaked paper showed that the British treasury can anticipate a £66 billion annual hit if a hard Brexit goes ahead.

A draft cabinet committee paper seen by the Times comes from a study ordered by former chancellor George Osborne into the likely impact leaving the EU would have on public finances.

It found that switching to a regime governed by World Trade Organisation, rather than EU, rules, would send GDP plummeting by almost 10 per cent. 

Nor would this be a brief fall from grace. The paper suggests a central estimate that GDP would be 7.5 per cent lower after 15 years with a loss of between £38bn and £66bn per year. 

Former Conservative minister Anna Soubry said: “The horrific damage of a hard Brexit is clear. Less tax revenue means less to invest in schools and hospitals, lower trade and investment means businesses and jobs at risk.”

“This danger is precisely why parliament must be involved in the principles to guide the Brexit negotiations. Britain will leave the EU, but we must do so in a way the protects our prosperity and reduces risk. The government should now make clear the ‘WTO option’ isn’t on the table.”

A government spokesman said: “We want the best outcome for Britain. That means pursuing a bespoke arrangement which gives British companies the maximum freedom to trade with and operate in the single market, and enables us to decide for ourselves how we control immigration.”

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