Brexit has damaged the economy as much as Covid. That’s the view of… the Liberal Democrats? Gary Lineker? Steve Bray? Try the government’s own economic watchdog.
Richard Hughes, the chairman of the Office for Budget Responsibility (OBR), has said the UK’s departure from the EU had reduced economic output by around 4% compared to if it had remained, a blow as much as that caused by the pandemic and Russia’s invasion of Ukraine.
He said it was a contributing factor to the “biggest squeeze on living standards” the country had ever faced, with household incomes unlikely to return to pre-pandemic levels until the late 2020s. Asked by the BBC’s Laura Kuenssberg how much Brexit was responsible for the 4% drop, Hughes said it was difficult to put it into “any kind of sensible context” but added: “It’s a shock to the UK economy of the order of magnitude to other shocks we’ve seen from the pandemic, from the energy crisis”.
The comments reflect comments from the OBR earlier this month that said the volume of UK imports and exports will be 15% lower than had the UK remained in the EU, further reducing growth rates. It said: “All major advanced economies experienced a collapse in trade during the pandemic, but the latest ONS data suggest that UK trade volumes remain 3.0% below their 2019 level in the third quarter of 2022, versus an average increase across other G7 countries of 5.5%.” On investment it said that the uncertainty from Brexit would lead to some investment projects would be postponed or cancelled.
It warned: “Business investment has stagnated in real terms for much of the period since 2016, such that on the eve of the pandemic it stood 16.2 per cent below our pre-referendum expectations.
“More recently, the pandemic and the increase in global energy prices have also weighed on investment. But in the face of these global shocks, UK non-dwellings investment has continued to underperform relative to other G7 countries.”
It is, of course, possible for the government to completely ignore the OBR. Liz Truss and Kwasi Kwarteng did exactly that – and look how well that turned out…