OBR warns of major Brexit tax risks

Britain faces a wide array of tax risks linked to Brexit, the Office for Budget Responsibility (OBR) has warned. The Fiscal Risk report said major problems included the potential loss of financial business in the City of London. While only contributing 3% of British jobs, these were often highly paid and thus losing them would lower the tax take.

The one-off hit of a large 'divorce bill' between Britain and the EU would not be too hard for the public finances to absorb, the OBR said. Instead, it added: "More important are the implications of whatever agreements are reached with the EU and other trading partners for the long-term growth of the UK economy."

It calculated that over a 50-year period, the economy could be 4.8% smaller if Brexit-related events lead to a loss of 0.1 per cent in productivity. The direct impact would be to increase the debt to GDP ratio by 50%, which could produce tax rises.