Britain could lose up to £66 billion ($81 billion) a year in GDP and the government could lose almost a tenth of its tax revenue under a so-called hard Brexit, leaked government papers suggest.
UK economic output could fall up to 9.5 percent if the country leaves the European Union’s single market, the Times of London reported, citing a draft government paper.
EU’s single market allows the bloc’s members to trade with each other without restrictions.
Under the “hard Brexit” formula, the UK may lose its preferential access to the EU's single market and suffer from soured relations with other EU members.
"The Treasury estimates that UK GDP would be between 5.4 percent and 9.5 percent of GDP lower after 15 years if we left the EU with no successor arrangement, with a central estimate of 7.5 percent," the report says, according to the Times.
It added: “In headline terms, a) trade would be around a fifth lower than it otherwise would have been; b) foreign direct investment would also be around a fifth lower and c) the level of productivity would be driven down by these reductions in trade and investment causing an overall reduction in the economy’s efficiency in the long run.”
The report said that if Britain does leave the single market it would use rules set up by the World Trade Organization, which deals with the rules of global trade.
“This is yet more proof that hard Brexit would be an act of sheer economic vandalism,” said Tim Farron, the leader of the opposition Liberal Democrats.
“We cannot stand by while this reckless, divisive and uncaring Conservative government wrecks the UK economy,” he added.
Experts have warned that leaving the EU will severely hurt London’s position as a financial hub, unless the UK decides to keep its access to the single EU market by loosening its stance on immigration.
British Prime Minister Theresa May has said she will trigger the Brexit process by the end of March 2017. The UK voted to leave the EU at a referendum in June.