Our main-case forecast is broadly for a continuation of current economic conditions. There appears to be little spare capacity domestically, but Brexit-related uncertainty is expected to keep a lid on demand growth.
The figure shows our assessment of the economic outlook under different Brexit scenarios (see Box A starting on page F6 for further details). The near-term outlook is consistent with a range of alternative Brexit outcomes, provided a transition period guarantees frictionless access to the EU single market and customs union. Beyond that, the outlook depends on the extent of trade barriers between the UK and EU. GDP would be broadly the same under continued EU membership as in our main forecast based on a ‘soft’ Brexit, though the costs of the uncertainty already incurred would not be recouped. GDP in the long term would be 3.1 per cent lower than under continued EU membership in a Customs Union scenario, and 5.4 per cent lower in an ‘orderly’ no-deal scenario.