Legal businesses should prepare to take a hit in their growth should the UK “crash out” of the EU, the Law Society has warned.
In a new report, the regulator said almost £3 billion could be “stripped” from the sector by 2025 if the UK leaves the European Union without a strong economic deal.
The figures, produced in collaboration with Thomson Reuters, are part of a set of economic forecasts highlighting the various potential Brexit outcomes.
The Law Society’s president, Christina Blacklaws, says the legal sector has been benefiting from a bumper 2017 – 2018, mainly due to a combination of Brexit-related work, steady demand from UK businesses and an increasing international workload.
But Brexit is likely to have a “significant negative effect on the legal sector in the medium and longer term”, she says.
“This is largely due to the knock-on impact of Brexit on the wider economy as demand for legal services relies on the success of other sectors of the UK economy.”
Under the various economic models produced by the regulator, the figures suggest that the sector would grow by an average of around 2.2 per cent from 2019 to 2025 if the UK were to negotiate a “soft Brexit” with the EU.
This falls to 1.5 per cent in a “hard Brexit” deal, such as implementing a Canada-style free trade agreement.
But in the event of walking away from the EU with no deal in place, growth would drop to just 1.1 per cent on average – cutting the sector’s average annual growth in half.
Ms Blacklaws continued: “Lack of agreement on Brexit negotiations combined with volatile global markets mean that we’re standing on thin ice publishing economic forecasts just now, so we are reviewing our figures regularly and looking at a range of Brexit scenarios.
“Our intention is to provide projections that are useful to the sector, to business and Government as they steer a course for the years ahead.”