What's a no-deal Brexit, and could it really cost millennials £108,000 each?

What's a no-deal Brexit, and could it really cost millennials £108,000 each?

Could millennials really miss out on up to £108,000 in lost earnings by 2050 in the event of a no-deal Brexit?

That was the worst case scenario from campaign group Our Future Our Choice, with the “likely cost” amounting to £76,000 in lost wages.

Their report made the front page of the Independent and featured in articles elsewhere, including The Week, The Huffington Post, The Guardian and the Metro.

Young People and Brexit, which was backed by former Prime Minister John Major, said a hard Brexit would cost young people three times more than tuition fees, and more than double the deposit first-time buyers need to purchase a home.

What would a no-deal Brexit cost millennials?

The research, by a University of Oxford economist called Thomas Peto, also looked at other Brexit scenarios, aside from a hard Brexit, which would leave the UK trading with the EU under World Trade Organisation rules. We’ll come to what a so-called “WTO-style” Brexit* (see jargon-buster below) would mean in a minute.

Under an “FTA-style Brexit” (Free Trade Agreement)**, his projected income losses ranged from £30,000 to £72,000, with £51,000 “most likely”.

Under an “EEA-style” Brexit***, we apparently stand to lose between £7,000 and £20,000 (most likely around £20,000). That’s European Economic Area, we’ll cover that and FTA further down too.

How we’re “stressed, frightened and angry” about the implications of Brexit

All the headlines look pretty scary written down, or coming at us through our radios and podcasts in the morning. Whether you agree with the calls for a “People’s Vote” or not, no one likes to be told they’re going to lose lots of money.

It’s hardly surprising then that a London School of Economics report (commissioned by a parliamentary committee looking into the impact of Brexit on young people) found us to be “stressed, frightened and angry” about the implications of Britain’s exit from the EU.  

No-one has a crystal ball to tell us which forecasts are the accurate ones. (Does it look like anyone knows what they’re doing?) You’ll have to decide what seems most plausible yourself, sorry.

One thing that does seem certain is that Britain is due to leave the EU on Friday 29 March at 11pm. That could only be stopped if all member states agreed to an extension, and that would infuriate those who campaigned and voted for Brexit.

Brexit scenario jargon-buster

*WTO-style Brexit: What is commonly referred to as a hard or no-deal Brexit under which the UK would be left with no trade agreement with the EU. So we would be trading with the continent under World Trade Organisation rules.

**FTA-style Brexit: Free Trade Agreements are designed to allow easier commerce between trading partners than under WTO-rules. It can just be a case of ensuring there are no tariffs or quotas. Differences in regulations could mean a certain amount of friction in trade and these agreements are generally not binding, so can be broken. It’s safe to say things would be more tricky for UK exporters and importers than they are at the moment.

***EEA-style Brexit: The European Economic Area includes the EU plus Norway, Lichtenstein and Iceland. That’s why this is often referred to as the “Norway model”. All EEA members enjoy full access to the European single market. Many Remainers argue this would be the least damaging form of Brexit for UK business, but Brexiteers say it would still leave the UK at the mercy of EU rules and regulations.

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