Professor Philip Lane:

The approaches are consistent. In a no-deal Brexit, we would see an immediate hit because of all the disruption, the market fragility and the loss of confidence. Those kinds of contractionary forces would arise because of the shock. As that shock fades away, the long-term reality is that we will be less productive, as will the UK. That is why we see numbers such as that, ten years from now, GDP will be 5% lower. The same approach will give both answers. There will be a big hit initially and then a degree of recovery, but we will never be back to where we would have been without Brexit. We are saying that four percentage points will be knocked off the economy in the first year. That is consistent with this longer-term forecast. There will be adaptation. The world will adapt. That does not mean that every firm will survive or that every region will be equally better off, but there will be adaptation over time.

It is important to say that these figures are based on a comparison with what would happen in the absence of Brexit. Five percentage points over ten years does not mean that we will be five percentage points below where we are now. It is compared to a growing economy. It is cost that can be avoided if a no-deal Brexit is avoided, but there are many other dynamics in the economy.