What assessment has the Welsh Government made of the impact of a no-deal Brexit on the Welsh economy?
There is compelling evidence that any Brexit which involves severing our ties with the Single Market and Customs Union would do significant economic damage across the whole economy, but in particular to our manufacturing sector and agri-food, where jobs and investment would be likely to be severely hit.
Uncertainties and interdependencies mean it is not possible to rely on one precise quantified estimate of the economic effects. It is important to draw on a range of evidence to understand the likely magnitude of the impacts. For similar reasons, it is not feasible to produce definitive estimates of which places or population groups will be most affected.
With these caveats, robust empirical evidence on key economic relationships demonstrate it is virtually certain leaving the EU without a deal or transition period will produce a severe economic slowdown in the UK, with, in the worst case, a recession that approaches in depth the one experienced in 2008-09. A slowdown of this magnitude might mean a reduction in Welsh employment equivalent to 40-50,000 jobs.
While certain sectors of manufacturing and agriculture will suffer particularly from specific initial shocks associated with new trade barriers, the lesson of previous recessions is that the largest negative effects are likely to be experienced by the construction industry, consumer-facing services and those sections of manufacturing most exposed to consumer and investment demand.Similarly, the people most likely to be adversely affected are those who are already most disadvantaged in labour market terms (particularly those with lower skills, disability or illness). The places most at risk are those with high concentrations of such people, particularly where the wider economy is less resilient.
The economy in Wales is likely to be up to around 10 per cent smaller than otherwise over the long term, depending on the nature of new trading relationships that are introduced over time and the speed of adjustment to those new relationships.
Lower economic growth will have associated effects on the tax base and therefore the scope to fund public services.
The Welsh Government is doing everything in our power, working with businesses and organisations right across Wales to prepare for this worst-case outcome, and protect sustainable jobs and growth.
We have ongoing and frank conversations about the impact of Brexit with businesses and their representatives. This helps us gather intelligence on their experiences and work together to prepare for the many practical implications of leaving the EU.