Brexit deal means ‘£70bn hit to UK by 2029'
Boris Johnson's Brexit deal will leave the UK £70bn worse off than if it had remained in the EU, a study by the National Institute of Economic and Social Research (NIESR) has found.
It concluded that GDP would be 3.5% lower in 10 years' time under the deal.
The independent forecaster's outlook is one of the first assessments of how the economy will fare under the new deal.
But the Treasury said it plans on a 'more ambitious' agreement with the EU than 'NIESR is basing its findings on'.
A spokesman said: "We are aiming to negotiate a comprehensive free trade agreement with the European Union, which is more ambitious than the standard free trade deal that NIESR has based its findings on."
NIESR said approval of the prime minister's deal "would reduce the risk of a disorderly outcome, but eliminate the possibility of a closer trading relationship with the EU".
Despite the agreement between the EU and the UK removing uncertainty, customs and regulatory barriers would "hinder goods and services trade with the continent leaving all regions of the United Kingdom worse off than they would be if the UK stayed in the EU," NIESR said.
"We estimate that, in the long run, the economy would be 3.5% smaller with the deal compared to continued EU membership," it added.
The report also found the proposed free trade deal with the EU was slightly worse for the economy than Theresa May's deal of last year.
Her deal would have reduced the size of the economy by 3% over the same period, NIESR said.
Founded in 1938, NIESR has no party political ties and is the UK's oldest independent economic research institute.
A year ago, it conducted a study commissioned by the People's Vote which said GDP would be 3.9% lower by 2030.
Earlier this month, Bank of England governor Mark Carney welcomed the new Brexit deal, saying it was a "net economic positive" as it "takes away the tail risk of a disorderly Brexit".
However, the governor said that the "different" future relationship negotiated with the EU meant it "remains to be seen" if overall the deal would be as positive for the UK economy as the deal put forward by Mr Johnson's predecessor Mrs May.
Chancellor Sajid Javid has refused to recalculate Treasury assessments on the impact of the government's Brexit deal, saying it is "self-evidently in our economic interest".
Slowing demand
NIESR's study modelled different Brexit scenarios against a baseline of the UK staying in the EU.
In the case of a no-deal Brexit, it said, the economy would shrink by 5.6%.
The government would dearly love to compare its agreement to the prospect of no deal.
On that basis, Boris Johnson's renegotiation looks better - on standard economic models such as those deployed by the respected National Institute of Economic and Social Research.
"New deal versus no deal" was the argument put to MPs when the Prime Minister was still trying to pass his deal. It was the position of the Chancellor, when he refused to publish his own version of such an analysis saying it was "self-evidently" better.
But we are now in a different situation.
The Prime Minister's deal is being put to the electorate versus a remain option or a different, far softer form of Brexit.
Crucially, NIESR calculates that the Johnson renegotiation leads to a slightly worse economic outcome than Theresa May's deal which it replaces, as the Bank of England Governor hinted to me earlier this month.
What is driving these results? The new deal creates more distance from the European Union economy, with more regulatory barriers to trade. Unlike May's deal, there could be checks on the origin of parts in the car industry, for example.
The overall impact of these extra barriers outweighs the benefit from extra certainty of "getting Brexit done". Individual businesses may well disagree. But the Treasury itself has chosen not to issue its own version of analysis such as this, even though it has the capacity to do so.
Presentational grey line
If the terms of trade with the EU remained unchanged, but "chronic uncertainty" persisted, GDP would be 2% lower.
"The economic outlook is clouded by significant economic and political uncertainty and depends critically on the United Kingdom's trading relationships after Brexit," NIESR said.
"Domestic economic weakness is further amplified by slowing global demand."
According to NIESR, the effects of Brexit on the UK economy are already being felt.
"The economy is estimated to be 2.5% smaller now than it would otherwise have been as a result of the 2016 Brexit vote," it said.
Brexit: EU considers flexible three-month extension
The EU is due to meet on Monday to consider a Brexit extension until 31 January, with an option for the UK to leave earlier if a deal is ratified.
A draft text to be shown to ambassadors from the 27 member countries includes multiple possible dates for Brexit: 30 November, 31 December or 31 January.
There will also be a commitment that the Withdrawal Agreement cannot be renegotiated in future.
Unless the extension is approved, the UK will leave the EU on Thursday.
Under the proposed legal decision to extend the Brexit process, the EU would also retain the right to meet without the UK to consider future business during the extension.
The EU has so far agreed to an extension after Boris Johnson was forced by Parliament to request it, but has not specified the new deadline date.
If EU members approve the request for a three-month extension, Mr Johnson would have to accept it, under the terms of the law passed by MPs to prevent a no-deal Brexit.
Any extension to the Article 50 process is technically flexible, meaning that it can come to an end as soon as a deal is approved by both parties.
But by writing this flexibility into the legal decision to delay Brexit, EU leaders aim to underline their neutrality from the political debate in the UK.
A short delay could be seen as risking a no-deal Brexit by those who support remaining in the EU, while a long delay could be seen by Brexit supporters as attempting to prevent the UK from leaving.
As part of the extension, the EU is expected to say the UK has "an obligation to suggest a candidate" to represent it on the EU Commission.
Mr Johnson has previously said "under no circumstances" will he nominate anyone to take over from Julian King when the new commission takes office on 1 November, arguing that officials need to focus on the UK's future outside the EU.
'Look at all options'
The decision from Brussels is set to come as the UK debates how to use any potential extension to break the Parliamentary deadlock.
The prime minister will put forward a motion calling for a 12 December election on Monday, which needs the support of two-thirds of MPs to succeed.
But the Liberal Democrats and Scottish National Party want to see a bill introduced that enshrines a 9 December election in law, as long as the Brexit deadline is extended to 31 January.
Conservative MP James Cleverly dismissed this plan as a "gimmick" and Labour leader Jeremy Corbyn called the move a "stunt".
But a Downing Street source said the government would "look at all options" if its own election motion failed.
Unlike the government plan, the Lib Dem-SNP bill would only require a simple majority to pass.
Operation Brock: No-deal Brexit motorway plan starts on M20
A plan to manage traffic congestion on a Kent motorway has come into force as part of plans for a no-deal Brexit.
Operation Brock sees one side of the M20 being used only by HGVs heading to cross-Channel ports.
All other traffic is restricted to a contraflow system on the opposite carriageway.
The traffic measures are designed to keep the M20 open in both directions in case there is disruption to services across the English Channel.
Lorries heading for Europe will face a 30mph limit between junctions eight (Maidstone) and nine (Ashford) on the coastbound carriageway of the M20.
All other traffic on the motorway - including lorries carrying out UK deliveries - must use a 50mph contraflow of two lanes in each direction on the London-bound side of the road.
Under plans for Operation Brock, hauliers could also be sent to a lorry park at Manston Airport, and the M26 could be be closed and used for queuing HGVs in the event of severe disruption.
A Highways England spokesperson said: "We are keeping the deployment of Operation Brock continually under review and are ready to stand it down if it will not be needed.
"Any decision to deactivate Operation Brock will be taken jointly, and we are in constant contact with the government and our partners in Kent."
Highways England said the contraflow takes about 48 hours to both activate and deactivate.
Operation Brock was last put in place in March four days ahead of the first planned Brexit date, but was deactivated three weeks later.
Brexit negotiators removed 'adequate' from worker rights plan
An internal UK government memo on the consequences of Boris Johnson's Brexit deal renegotiation singles out the removal of the word "adequate" from the UK-EU Political Declaration to describe mechanisms for enforcing common social, environmental, and labour standards after Brexit.
The word "adequate" appears to have been replaced by the word "appropriate".
Extracts of a note written for the government's cross-Whitehall Economic Partnership Steering Group, and seen by the BBC, say the "parties will include "appropriate" (rather than "adequate") mechanisms for dispute settlement" of key "level playing field commitments" in a future trade deal with the European Union.
The consequence of that change, the note says, is that it means that it is now possible to argue it is "inappropriate for the future UK-EU relationship" that disputes about these commitments on employment, environment, tax, state aid and other standards should be subject to binding arbitration.
Level playing field
The memo, first leaked to the Financial Times and marked "Official Sensitive", contains a series of claimed negotiation wins from the Brexit deal renegotiation, weakening the scope and strength of Level Playing Field Commitments (LPF), a crucial element in a future UK-EU trade arrangement.
"The previous Protocol applied wide-ranging LPF measures on a UK-wide bases as a response to UK access to the EU market through the single customs territory.
"UK negotiators successfully resisted the inclusion of all UK-wide LPF rules" says the memo, with the last four words put in bold for emphasis.
"The only level playing field provisions in the revised Protocol are those necessary to support the operation of the Single Electricity Market and state aid measures that affect trade between NI and the EU," it says.
The title of the memo is "Update to EPSG (Economic Partnership Steering Group) on Level Playing Field Negotiations".
This is the first acknowledgement that changing the Level Playing Field commitments agreed by Theresa May was a specific aim of the PM's renegotiation.
Weaker provisions
In public, the PM focused on changing what he referred to as "the anti-democratic backstop", which had been rejected by the government's parliamentary allies, the Democratic Unionists.
In the end, the PM's new solution, creating a new trade and regulatory border in the Irish Sea, further alienated the DUP. Backbench eurosceptic Conservative MPs have, however, been won over to the deal.
Theresa May's original 2018 deal included a range of specific enforceable common standards for the UK and the EU within the legally binding Withdrawal Treaty.
Some of these standards were related to EU law, others referred to the OECD (Organisation for Economic Cooperation and Development), International Labour Organisation and the Council of Europe.
These were all removed, along with the backstop, and the only reference remaining in the overall deal was in the non-binding Political Declaration.
The memo shows that within Whitehall, weakening these provisions was a key part of the renegotiation.
Regarded as an internal success, their removal paves the way for a "much more open starting point for future relationship negotiations" that allow for "a range of landing zones" for a future deal.
'Exaggerated'
"The Political Declaration text provides us with a framework for negotiating FTA-style commitments on Level Playing Field," the memo concludes under the headline "Next Steps".
That is a reference to the fact that, unlike the original Brexit deal agreed by Theresa May, dispute settlement mechanisms have not applied to existing standard EU Free Trade Agreements.
Sam Lowe, trade fellow at the Centre for European Reform, said: "The Level Playing Field commitments in the EU's Free Trade Agreements with Canada and Japan are unenforceable, because they are specifically excluded from the dispute settlement mechanisms. The government appears to be aiming for the same treatment."
Speaking on the BBC's Andrew Marr Show on Sunday, Conservative Party chairman James Cleverly rejected suggestions there are attempts to relax workplace rights or environmental protections.
"In many areas we have already gone further than the European Union," he said. "We are making hard improvements on worker rights through an increase in the National Living Wage."
The government was also strengthening rules on maritime protection and animal welfare, he added.
On Saturday, ministers said stories about the leaked memo were "not correct" and "way exaggerated".
The government also said: "The UK government has no intention of lowering the standards of workers' rights or environmental protection after we leave the EU.
"UK level playing field commitments will be negotiated in the context of the future UK-EU free trade agreement, where we will achieve a balance of rights and obligations which reflect the scope and depth of the future relationship."
DUP conference: Johnson 'should seek Brexit deal changes'
Boris Johnson should again seek to re-negotiate the Brexit deal if he wants DUP support, Arlene Foster has said.
The DUP leader told the party's conference that the DUP had sent the PM to the "naughty step in Parliament" twice in the last week.
The DUP has twice voted against the government on crucial Brexit votes recently, because of its opposition to Mr Johnson's Brexit strategy.
The party said it would not support the NI arrangements negotiated by the PM.
This is because it "creates a border in the Irish Sea".
The DUP leader told Saturday's annual conference she would encourage the PM to seek further changes to the deal.
"We will not give support to the government when we believe they are fundamentally wrong," she said.
Boris Johnson does not have a Conservative majority in Parliament and the DUP's votes hold the balance of power on key decisions in the Commons.
Detrimental to Northern Ireland
Mrs Foster accused Number 10 of acting in a way that was "detrimental" to Northern Ireland and was taking the country in the wrong direction.
She also said if the government did not change its strategy that the DUP's 10 MPs would "oppose them and we will use our votes to defeat them".
On Monday, the government will ask MPs to vote in favour of its call for a general election.
Mrs Foster did not say whether the party would vote with the government, but said the DUP was "ready for any general election that may come".
The DUP leader also addressed the Stormont deadlock.
Northern Ireland has been without a government since 2017, when the two main power-sharing parties split in a bitter row.
One of the key sticking points has been the demand from Sinn Fein to legislate for an Irish language act, with the DUP refusing to agree to it.
Mrs Foster said her party remained committed to "legislate in a balanced way for language and culture".
"If we can find a way to craft language and culture laws that facilitates those who speak the language, but does not inappropriately infringe on or threaten others, the DUP will not be found wanting," she added.
"But overall agreement needs to be a two-way street."
Speaking earlier, Nigel Dodds told the conference that the union of the United Kingdom was "non-negotiable" in any Brexit deal.
The party has said it will not support the Brexit arrangements for Northern Ireland negotiated by Boris Johnson as it "creates a border in the Irish Sea".
The DUP deputy leader urged the prime minister to stick to commitments he made last year, when he said no Conservative government would support such a plan.
The party argued the deal would damage the local economy and undermine the union.
"I say it again clearly for those who have failed to listen… the union of this United Kingdom is non-negotiable," said Mr Dodds.
At last year's conference, Boris Johnson was the keynote speaker.
He told DUP members that no Conservative government should support a plan that would lead to differences between Northern Ireland and the rest of the UK.
'The pressures will be great'
Mr Dodds accused Mr Johnson and other government ministers of not knowing "what on earth" they had negotiated as part of the revised withdrawal agreement with the EU.
He said the plan, which would see NI businesses having to fill in exit declaration forms on goods going to GB, new checks on goods crossing the Irish Sea and extra administration, as "the worst of all worlds".
The North Belfast MP also said the DUP would not back down from opposing the deal.
"The coming days will not be easy, the pressures will be great," he added.
Analysis by BBC News NI Political Reporter, Jayne McCormack
There was a more muted feel at this year's DUP conference, with no star turn from Boris Johnson.
Instead the party's leadership took turns to chastise him for reneging on Brexit commitments he made when he stood on that very stage last November.
Both Arlene Foster and Nigel Dodds seemed angry and emotional during their speeches - as many DUP politicians have sounded in recent days.
Just like last year when it opposed Theresa May's Brexit deal, the DUP is again in a political corner.
But this time, it does not have the ear of many Conservative Brexiteer MPs, who have sided with Boris Johnson and will likely dismiss the DUP's demands.
grey line
The DUP has said it will wait until Monday before giving its response to Mr Johnson's call for a general election.
The prime minister wants Westminster parties to agree to an election on 12 December.
The DUP entered a confidence and supply arrangement with the Conservative Party almost two and half years ago and helped prop up the minority government under Mr Johnson's predecessor, Theresa May.
The DUP has met Mr Johnson many times since he became prime minister.
At the start of this month, DUP members chanted his name when he addressed their fringe event at the Conservative Party's annual conference in Manchester.
But the relationship soured on 17 October, when Mr Johnson struck a Brexit deal with EU leaders that the DUP said it could not endorse.
All Northern Ireland MPs who take their seats in the Commons - the 10 DUP representatives and independent North Down MP Lady Hermon - opposed the government in votes over the EU withdrawal deal and an accelerated timetable to fast-track the bill through Parliament.
Commemorative Brexit coins bearing 31 October date 'put on hold'
The production of thousands of special commemorative Brexit coins has been put on hold amid continuing uncertainty over when the UK will leave the EU.
The Royal Mint had been asked to make new 50p pieces featuring the 31 October date on which the UK was due to leave and a message of "Peace, prosperity and friendship with all nations".
The Queen approved the order at a recent Privy Council meeting.
But the Treasury said the initiative had now been "paused".
The UK was due to leave the EU at the end of the month but, amid continuing political deadlock in Parliament, the bloc agreed on Friday to further delay the UK's departure.
It is set to make a decision on the length of the extension to the Brexit process next week.
Up to 10 million new coins were reportedly being made ready for the 31 October deadline, in a project championed by Chancellor Sajid Javid since he took office in July.
His predecessor Philip Hammond had planned a limited edition of about 10,000 commemorative 50p coins to be sold to collectors for £10 each.
Legal tender
But Mr Javid ramped up the plans this summer in what was seen as a symbol of the UK's determination to leave the EU and forge a different relationship with the EU.
Under plans signed off by the Queen earlier this month, three different types of 50p Brexit coins were to be made from gold, silver and cupro-nickel - a mixture of copper and nickel.
The gold coins were not intended to enter mass circulation.
But the silver and cupro-nickel ones were set to become legal tender.
The design, featuring the monarch's head and a standard inscription on one side and the special message and date on the other, was approved at a meeting of the Privy Council on 8 October - attended among others by Leader of the House of Commons Jacob Rees-Mogg.
The Royal Mint, which is owned by the government, said it would not comment on how many coins had been made and what would happen to them now, saying this was "commercially sensitive".
But a Treasury spokeswoman said: "We have paused production of the Brexit coin, and will take a final decision in due course."
Since entering Downing Street in July, Boris Johnson has repeatedly promised to get Brexit done by 31 October, describing it as a "do or die" commitment.
But his efforts to do so have been frustrated by Parliament, with MPs voting earlier this week for more time to scrutinise legislation needed to implement his deal with the EU.