HAMPSHIRE will suffer more than many other counties if Britain remains in the European customs union, according to a new report.

Campaigners claim a Brexit deal which involved continued membership of the customs union would leave the UK £80bn a year worse off than if it had stayed in the EU.

The research has been carried out by the National Institute of Economic and Social Research (NIESR).

Citing the small regional differences likely to result from a “customs union Brexit” the report predicts that Hampshire and the Isle of Wight would be particularly hard hit.

It claims the area’s economy would shrink by 3.3% - or £2.8bn - within a decade.

The report’s co-author, Arno Hantzsche, said: “Regional effects are driven by a range of factors, including the composition of local industry, the size and flexibility of local markets and the intensity of trade with the rest of the EU.”

Mr Hantzsche said Hampshire and the Isle of Wight would see its Gross Domestic Product (GDP) decline by slightly more than the national average.

He added: “This is mainly driven by its geographical proximity to mainland Europe and the ports in Southampton and Portsmouth which currently facilitate trade between local firms and the rest of the EU.

“These firms would be particularly affected by any trade barriers resulting from a customs union Brexit.”

The NIESR report says keeping the country tied to the trading bloc, hindering its ability to strike deals with other countries outside the EU, would deliver a huge blow to its national income. Ministers would have to raise taxes or cut public services to make up the shortfall.

Environment Secretary Michael Gove has said: “The referendum was clear. We need to take back control of trade. That means leaving the protectionist customs union.”

But those in favour of remain argue that cutting trading ties would itself damage the UK economy.

The NIESR report was commissioned by the People’s Vote campaign, which is demanding a second referendum.