Boris Johnson’s Brexit deal will leave the UK £70bn worse off than if it had remained in the EU, a study by the National Institute of Economic and Social Research (NIESR) has found.
It concluded that GDP would be 3.5% lower in 10 years’ time under the deal.
The independent forecaster’s outlook is one of the first assessments of how the economy will fare under the new deal.
But the Treasury said it plans on a ‘more ambitious’ agreement with the EU than ‘NIESR is basing its findings on’.
A spokesman said: “We are aiming to negotiate a comprehensive free trade agreement with the European Union, which is more ambitious than the standard free trade deal that NIESR has based its findings on.”
NIESR said approval of the prime minister’s deal “would reduce the risk of a disorderly outcome, but eliminate the possibility of a closer trading relationship with the EU”.
Despite the agreement between the EU and the UK removing uncertainty, customs and regulatory barriers would “hinder goods and services trade with the continent leaving all regions of the United Kingdom worse off than they would be if the UK stayed in the EU,” NIESR said.
“We estimate that, in the long run, the economy would be 3.5% smaller with the deal compared to continued EU membership,” it added.
The report also found the proposed free trade deal with the EU was slightly worse for the economy than Theresa May’s deal of last year.
Founded in 1938, NIESR has no party political ties and is the UK’s oldest independent economic research institute.
A year ago, it conducted a study commissioned by the People’s Vote which said GDP would be 3.9% lower by 2030.
Earlier this month, Bank of England governor Mark Carney welcomed the new Brexit deal, saying it was a “net economic positive”.
However, the governor said that the “different” future relationship negotiated with the EU meant it “remains to be seen” if overall the deal would be as positive for the UK economy as the deal put forward by Mr Johnson’s predecessor Mrs May.
Chancellor Sajid Javid has refused to recalculate Treasury assessments on the impact of the government’s Brexit deal, saying it is “self-evidently in our economic interest”.