Brexit will hurt UK investment and growth, Britain's Nobel Prize-winning economist Oliver Hart says

Hart’s comments  came in the run-up to Britain’s historic referendum on whether to leave the EU

Click to follow
The Independent Online

Oliver Hart, Britain’s Nobel prize-winning economist, has warned that UK’s vote to leave the EU, will hurt Britain’s investment and growth.

His comments over the damaging effect of a Brexit vote came in the run-up to Britain’s historic referendum on whether to leave the EU.

Hart, a British American Professor of Economics at Harvard University, said:  “The EU is Britain’s most important trade partner. Trade barriers with the EU would rise and this will hurt Britain’s investment and growth.”

In a separate interview with the Chicago Tribune in August, he said: “Post-Brexit agreement between the UK and the EU is likely to involve trade barriers."

"This will reduce gains from trade. The UK will suffer," he added.

Business groups have since accused the Government of imperilling the economy with statements suggesting the UK is heading for a hard divorce from the European Union.

Prime Minister Theresa May has given the clearest signal yet that she is veering towards a ‘hard Brexit’ as she told the Conservative party conference last week that those wanting to compromise on immigration controls are looking at things the “wrong way”.

Carolyn Fairbairn, who took over the Confederation of British Industry (CBI) last year, the government's stated emphasis on controlling immigration sent out "signs that the door is being closed, to an extent, on the open economy, that has helped fuel investment."

Fairbairn also warned it was crucial for ministers to state that Britain would not be reduced to the basic tariff arrangements set down by the World Trade Organisation (WTO) when it is expected to exit the EU in 2019, and that the passporting system allowing easy access for service industries would stay in place.

Her comments were followed by a warning from the British Retail Consortium (BRC).

The BRC said that without reaching the right agreement with the EU by 2019, the UK could be forced to use World Trade Organisation (WTO) rules.

Under WTO rules, tariffs on food and clothing could rise sharply, with meat increasing by 27 per cent and clothing and footwear up to 16 per cent.

Richard Baker, chairman of the BRC urged the Government to avoid “a disproportionately severe impact on retailers and their customers.”