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Leaked forecast of economic woe inflames 'Brexit' debate in Britain

A leaked, and gloomy, economic forecast has inflamed arguments about Britain's decision to leave the European Union. (Jan. 31, 2018)

A bitter war of words erupted within the British government Tuesday over a leaked analysis that reportedly shows the government expects withdrawal from the European Union will dramatically hurt the economy.

The analysis was written by officials in the Department for Exiting the European Union and reportedly predicts that growth would be significantly lower than if Britain were to remain a member of the 28-nation bloc.

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Government officials acknowledged the existence of the document but have not released it.

The leak to BuzzFeed sparked a heated debate within the House of Commons and more infighting within the ranks of Prime Minister Theresa May's government, which continues to be deeply divided over how the country should negotiate its departure from the EU.

Some lawmakers said the leak was an attempt to derail the process by those who cannot come to terms with the decision by voters in June 2016 to leave the EU.

"There is clearly a campaign to overturn the referendum result," Steve Baker, a Conservative Party minister in the Department for Exiting the EU, said Tuesday in Parliament.

But he was also forced to defend the government's decision not to make the leaked document public, saying it was "preliminary" and should therefore not be taken too seriously.

Pro-EU members of Parliament denounced that explanation, saying the government was trying to bury bad news and should publish the analysis in full. "Stop pretending this is something to do with protecting our negotiating position," said Ken Clarke, a member of the Conservative Party, during a particularly heated exchange.

The assessment, as described by BuzzFeed, which reported its existence late Monday, is dated January 2018 and analyzes three of the most likely scenarios by which Britain could sever its ties to the EU.

The "no deal" option would see Britain revert to World Trade Organization rules and decrease growth by 8% over the next 15 years.

If a free-trade deal is brokered, growth would drop 5%.

And if Britain opts for a so-called soft Brexit, whereby it remains in the EU single market, growth would still fall 2%.

This month, the Scottish government published an analysis showing that a so-called hard Brexit — in which Britain would leave the European Union single market entirely — would cost Scotland's economy $18 billion a year. That led some opposition figures to accuse the government of scaremongering.

"Thanks to this leak, we now know the U.K. government is sitting on analysis which comes to precisely the same conclusion," Scottish National Party leader Nicola Sturgeon said.

The leaked report comes a month after May and European Commission President Jean-Claude Juncker finally agreed to a deal that brought a close to phase one of the Brexit negotiations.

Those talks centered on the rights of EU citizens living in Britain and British citizens living in the remade EU, the relationship between Northern Ireland, which will leave the EU, and the Republic of Ireland, which will remain, as well as the so-called divorce bill that Britain has to pay to cease membership.

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The next round of talks turns to trade, which many have warned could prove fraught and potentially do major harm to the British economy.

To help mitigate any such damage, May has already discussed future trade deals with President Trump and headed to China on Tuesday with her husband and a delegation of 50 British business leaders.

But Peter Iosif, a senior analyst at the online trading firm IronFX, said "the expectation is that [any deal she strikes with other countries] may not be able to fill the gap."

In the run-up to the 2016 referendum, Brexit opponents warned that a split from the EU would lead to job losses and financial collapse.

Brexit supporters pointed out that in the aftermath of their victory — with 52% of the vote — the economy has proved to be remarkably robust.

Iain Duncan Smith, a Conservative member of Parliament, said the doomsday scenarios in the leaked report would not come to fruition.

"I think the answer is we should take this with a pinch of salt," he said.

Boyle is a special correspondent.

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