UK Government impact assessment shows UK may have to borrow £120bn more after Brexit

Iain Duncan Smith campaigning to leave the EU - Image credit: PA Images

The UK could be on course to borrow £120bn more to cope with the impact of Brexit, according to the UK Government's own assessments.

In contrast to the claim that leaving the EU would free up billions of pounds a year to spend on public services such as the NHS, the impact analysis says the Treasury will be forced to borrow large sums between 2019 and 2033.

The most costly option would be leaving the EU without a deal with just World Trade Organisation terms, according to the analysis by the House of Commons Brexit Select Committee.

The country will still need to find around £80bn even if it manages to negotiate a free trade agreement – the closest option to the UK Government's aims.

If it negotiates a European Economic Area-style agreement, including remaining a member of the single market, which the Government has ruled out, ministers will still have to borrow some £40bn more.

The numbers make tough reading for those who campaigned for a Brexit vote on the back of the Vote Leave promise the UK would take control of £350m a week in payments currently sent to Brussels.

Labour MP Chris Leslie, speaking for the Open Britain campaign group, said: "This whopping hit to the public finances, on top of an exit bill of at least £40bn, means less money for the NHS, for schools, for the defence budget and all our other national priorities.

"The Government can no longer conceal the grim fact that they are leading us to a new era of austerity.

"As new facts like these emerge about the monumental costs of Brexit, everyone is right to keep an open mind about whether it is all worth it."

But the UK Government has argued the scenarios modelled in the analysis do not cover its hoped-for post-Brexit outcome of a bespoke deal with special measures for services.