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Hard Brexit 'would cost Europe twice as many jobs as UK', say economists

Prime Minister Theresa May is due to host Donald Tusk, President of the European Council, at No.10 as the prospect of a hard Brexit looms large (Matt Cardy/Getty Images)

Twice as many jobs will be lost in Europe as the UK if a hard Brexit takes place, economists have warned.

Should Britain walk away from the bloc without a deal, up to 1.2 million jobs will be axed across the EU, together with about 526,000 in the UK.

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The analysis – by researchers based at the University of Leuven in the heart of Brussels – showed 42,000 jobs could be lost in Belgium alone, with the food industry among the areas hardest hit.

It could come as a wake-up call to the EU’s chief negotiator Michel Barnier and the rest of the trading bloc.

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Barnier and David Davis, the UK’s Brexit secretary, meet this week for a fourth round of talks but seem as a far apart as ever on the key issues of the divorce bill, the Irish border and the future of citizens’ rights.

Theresa May tried to break the impasse with her speech in Florence last week – but the prime minister again said no deal would be better than a bad deal for Britain.

The university research, by economists Hylke Vandenbussche, William Connell and Wouter Simons, said the EU27 would suffer a 1.54% dip in GDP if a hard Brexit is the ultimate outcome when the UK leaves the EU in early 2019.

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And it concluded such a scenario, under which Britain and the EU return to trading on WTO terms, could see the UK suffer a 4.48% slump in GDP, reinforcing the view that failing to secure a deal would be a “lose-lose” situation.

In absolute terms, Germany would be among the nations to lose out heaviest, but smaller countries such as Ireland and Malta have most to lose, said the report.

The research backs up previous reports which have also suggested that a return to WTO terms would have a damaging impact on the European economy as well as Britain.

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Theresa May met European Council president Donald Tusk on Tuesday – the first opportunity she had to gauge the view of a major EU leader to her Florence speech.

But, while Tusk described her speech as realistic, showing the UK’s “philosophy of having a cake and eating it was finally coming to an end”, he added there was not “sufficient progress yet” to move on to the next phase of talks.

There has been speculation the UK will offer €20bn to cover commitments during the two-year transition period, although no figure has been publicly revealed.

The EU is thought to want at least €60bn for the divorce.