Young people to lose up to £108,000 in earnings if there is a no-deal Brexit, new research warns

John Major says findings underline why leaving the EU may be seen as the moment Britain 'took leave of her senses'

Rob Merrick
Deputy Political Editor
Thursday 25 October 2018 20:38 BST
Brexsplainer: Living standards, wages and prices

Young people will lose as much as £108,000 in earnings by 2050 if the UK crashes out of the EU without a deal, according to new research laying bare the full cost of Brexit for the generation that opposed it.

The huge bill – more than three times the cost of deposit on a first home – shows the young will “lose the most” from leaving the EU, campaigners said.

Compiled by an Oxford economist, it says young people will be up to £32,000 worse off even under a “soft Brexit”, because every exit scenario will make the UK poorer.

Former prime minister John Major, who endorsed the report, said it underlined how Brexit was “never the choice of the young – who voted overwhelmingly to remain in the EU, while their elders voted to leave”.

Femi Oluwole, of the Our Future, Our Choice youth group, campaigning for a Final Say Brexit referendum, said: “We are a generation who don’t want to live with Brexit, yet it will cost us three times more than tuition fees, or double the average deposit needed for a house in lost wages and earnings.”

And Will Hutton, the political economist, said: “Young people are surely right to protest in such numbers that their future is being profoundly compromised.”

The analysis calculates the loss of earnings from the Treasury’s own leaked projections for the damage from Brexit, which was published earlier this year after a huge row.

It said a no-deal Brexit, leaving Britain trading with Europe on World Trade Organisation (WTO) terms, would reduce GDP by 8 per cent over 15 years.

Leaving with a “Canada-style” free trade agreement, as favoured by Boris Johnson, would see growth cut by 5 per cent – while even staying inside the single market, a “Norway” deal, would deliver a 2 per cent hit.

The research turns those figures into the impact on earnings which, because the economy would be smaller permanently than if the UK stayed in the EU, would linger to 2050 and beyond.

A WTO Brexit would cut total earnings by between £44,000 and £108,000 – with £76,000 the most likely cost – while “Canada” would cost £30,000-£72,000 and “Norway” £7,000-£32,000.

The short-term hit from a no-deal departure would also be significant, the study says, costing 18 to 21-year-olds £675 a year and 22 to 29-year-olds £830 a year.

The study, by Thomas Peto, an economic researcher at the University of Oxford, also points to other ways the young will be punished by Brexit, including:

* The loss of freedom of movement – with 78 per cent of 18 to 20-year-olds saying they will miss the right to live and work across the continent.

* They are disproportionately agency and part-time workers – where EU protections were resisted by the UK and are “most at risk of repeal after Brexit”.

* The threat to EU youth education, training and employment initiatives – including the Erasmus+ scheme, allowing students to live and work abroad.

* The minimum income threshold for UK nationals to bring foreign spouses or children into the country is set to be extended to EU nationals.

* Some data protection rights will be lost – which will “particularly affect a generation who have grown up online”.

The report also cites polling suggesting that 71 per cent of 18-24-year-olds voted Remain in the 2016 referendum and that 84 per cent of 18-20-year-olds would do so now.

Mr Major seized on the findings to repeat his call for a fresh referendum on the Brexit outcome, saying people were increasingly asking “how could the UK have voted to enact such a policy of self-harm?”

“History may well judge that – for a time – the world’s most pragmatic of nations took leave of her senses,” he said.

Mr Major added: “Since June 2016, there are nearly two million more young people eligible to vote. It is only right that they have a say in their nation’s future.”

Mr Hutton added: “This careful analysis shows just how badly young people – already disadvantaged by the breakdown of career structures and high housing costs – will be further hit by Brexit.”

And Mr Oluwole said: “Now that the implications for our generation have become clear, we need a People’s Vote on the government’s Brexit deal.”

The research comes as the Brexit talks remain deadlocked over the issue of the Irish border backstop – with just five months until departure day next March.

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