Brexit projected to have cost the UK the same as entirety of EU budget payments combined
Source: https://2bm.com/no-deal-brexit/
Bloomberg economist Dan Hanson recently published statistics that detail the UK’s losses due to lagging economic growth since the June 23, 2016 referendum result. Drawing on the historical correlation between the rate of GDP expansion between the UK and the other six G7 countries (Canada, France, Germany, Italy, Japan, and the United States)—which until 2016, was an almost identical graph—Hanson estimates that to date, the country has lost £130 billion in potential GDP.
By the end of 2020, the prediction estimates a further £70 billion in lost GDP, putting the total at a disconcerting £200 billion. For comparison, according to the House of Commons Library, the UK has contributed £215 billion to the EU budget in the entirety of its 47-year Union membership (adjusted for inflation). Unlike its EU subscription fee, however, losses in the three and a half years since the Brexit vote cannot be offset by the economic benefits of free trade and free movement of workers.
Of course, it is important to distinguish between the actual transferring away of £215 billion and the hypothetical loss of £200 billion due to arrested GDP growth. The latter is an estimation based on historical economic data, which calculates net loss from a hypothetical ideal situation, rather than a precise, tangible payment as with the latter.
Yet, even by its own standard, the UK has irrefutably fallen off: foreign business investment has tailed off and economic growth per year has been halved from pre-referendum, falling 2% to 1%. It would also be remiss to overly discredit the prediction on the basis that the loss is based not on a real expense but on an economic comparison; a UK without Brexit would be, by all known estimates, £200 billion richer than its current form by year’s end.
On March 11, Chancellor of the Exchequer Sajid Javid plans to reveal the Conservatives’ revised budget for the coming year, one he assures will “unleash Britain’s potential” and “[usher] in a decade of renewal.” The government therefore appears confident that having weathered the past three and a half years, it can move forward relatively unhindered financially.
This is partially true: with Brexit finally on the horizon, it is almost certain that the national economy will receive a much-awaited boost at year’s end, if only from the certainty surrounding the country’s fate. What is generally agreed upon among economists, however, is that most of the referendum-through-Brexit losses are not to be made up. Nor will the going be easy after the year-long transition period begins at the end of January, with losses (as compared to an EU-member UK) more than likely to continue for the foreseeable future.
Hanson sums up his findings with this exact sentiment: “As the UK comes to terms with its new trading relationship with the EU and grapples with the productivity challenge that has hindered growth since the financial crisis, the annual cost of Brexit is likely to keep increasing.”
