Brexit is responsible for £33bn of damage to the UK economy, study finds | Daily News Byte

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Brexit has cost the UK a staggering £33bn in lost trade and investment, with a new study finding that the economic damage is worse than previously feared.

Research by the Center for European Reform (CEF), shared with Independentshows that Britain’s economy is 5.5 per cent smaller than it would have been if the country had stayed within the EU.

The UK’s trade in goods is 7 per cent lower and investment is 11 per cent lower than if the Remain campaign had won the 2016 Brexit referendum, according to analysis by the think tank.

“Brexit has clearly had a significant impact on the economy,” said John Springford, deputy director of the CEF. “There has been a significant blow to trade and investment.”

Mr Springford, author of the study, added: “There is a gap between what politicians want to say about Brexit and what the data tells us. I think it has become impossible to argue that the UK economy has not been damaged by Brexit.

Using data from other advanced economies such as Britain before Brexit, including the US, Germany, Norway and Australia – CER modeled the performance of a “doppelgänger” UK – had the nation remained within the EU.

A previous CER report found that the British economy would have been 5.2 per cent smaller by the end of 2021 if the country had not left the EU, a loss of around £31bn.

The think tank has now found that UK GDP by June 2022 would have been 5.5 per cent lower had it not been for Brexit, a loss of £33bn.

The economic impact, first seen in the years since the 2016 referendum, has become significantly larger after the UK leaves the single market and customs union in early 2021, the CER found.

“If you raise trade barriers significantly with your closest trading partner it will have a big impact on your trade volume,” Mr Springford said.

He added: “There has been a very clear impact on investment in the UK since the 2016 vote – it has completely flatlined. It is not true for other similar economies. It tends to slow growth because it reduces productivity.”

Mr Springford said the impact of Covid had complicated the picture a bit when the think tank did a previous assessment earlier this year.

But he said it was now clear that the difference between Britain’s sluggish performance compared with similar economies was down to Brexit rather than the pandemic. “I am confident that Covid is not distorting the picture.”

Tory Chancellor Jeremy Hunt has rejected dire predictions of a Brexit blow to the economy and Labor leader Sir Keir Storm has said he does not accept the idea that rejoining the EU single market will boost growth.

Mr Springford said political parties must be “straight” with the public about the economic impact of Brexit if they are to set out clear and realistic plans for economic growth.

“While many of the marginal seats that the Conservatives and Labor are fighting over are relatively pro-Brexit, there is an incentive to minimize or ignore the economic consequences,” he said.

Layla Moran, Liberal Democrat spokeswoman for international development, said the research showed the government’s approach to trade with the EU was “causing serious damage to our economy”.

She added: “Their decision to pile endless reels of red tape on British business was based on ideology, not practicality. Small businesses, fishermen and farmers are paying the price for this botched conservative trade deal.

Naomi Smith, chief executive of the Best for Britain campaign group, said it was “not surprising that the damage to the economy and personal finances after leaving the EU is greater than estimates made at the start of the year”.

She added: “With the economic reality exposed, most people now realize that the Brexiters have sold them a baby. If Sunak wants to turn the economy around before the next election, he must stop pandering to a minority of xenophobes and obstacles with our biggest trading partner. should start reducing.”

The Office for Budgetary Responsibility estimates that Brexit will reduce GDP by 4 per cent over the 15 years from 2016 – swiping around £100bn from the economy.

Mr. Springford said it was too early to say about long-term damage. “It may be that most of the economic costs have already been passed on,” the economist added. “But it is also possible that the long-term costs of Brexit could be higher than the OBR estimates.”

It follows a dismal new report which found that Brexit has “added fuel to the fire” of the crisis facing the NHS and social care system. The Nuffield Trust said the closing of the EU migration “relief valve” has exacerbated staff shortages.

A report by the Institute of Health found that post-Brexit pressure on the supply of medicines and medical equipment also continues to increase. Drug shortages in the UK have been “particularly prolonged” – possibly due to trade barriers and currency devaluation associated with Brexit, the study concluded.

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