Britain to take much bigger GDP hit from Brexit than the EU

BRUSSELS: Britain's exit from the European Union will cost the bloc around 0.5% of economic growth over the next 24 months, but Brexit will be more than four times more painful for the United Kingdom, the European Commission said on Thursday.

Britain left the EU at the end of January last year, but kept its full access to the 27-nation bloc's single market until the end of 2020, when it was replaced by a trade agreement.

"For the EU on average, the exit of the UK from the European Union on Free Trade Agreement terms is estimated to generate an output loss of around 0.5% of GDP by the end of 2022, and some 2.25% point for the UK," the Commission said.

The EU-UK trade deal covers goods, services, investment, competition, subsidies, tax transparency, air and road transport, energy and sustainability, fisheries, data protection, and social security coordination.

In goods trade, the agreement sets zero tariffs and zero quotas on all goods complying with the appropriate rules of origin -- a more trade-friendly option than standard trading terms under World Trade Organisation (WTO) rules.

"Compared to the 'WTO assumption' that was modelled in the autumn forecast, the EU-UK FTA reduces this negative impact for the EU on average by about a third and for the UK by about a quarter," the Commission said.

But the Commission also said that while there were no tariffs and quotas on goods, there were significant non-tariffs barriers for trade in both goods and services.

"In sum, while the FTA improves the situation as compared to an outcome with no trade agreement between the EU and the UK, it cannot come close to matching the benefits of the trading relations provided by EU membership," the Commission said.