UK economy ‘losing £600m because of Brexit every week’
Brexit has cost the British economy £600 million a week since the referendum, and the shock of a no-deal divorce could hammer the country even harder.
A new report published by investment banking giant Goldman Sachs suggests that, since the June 2016 vote, nearly 2.5 per cent has been shaved off GDP.
It argues that, had UK voters opted to remain, the economy would have been in a much stronger position, instead of underperforming and lagging behind other advanced economies.
Goldman’s number crunchers concluded that investment has been one of the biggest casualties of the Brexit debacle, confirming official data which has shown it in decline.
“The component-level breakdown reveals that output losses have been concentrated in investment and private consumption,” they said.
“The outsized impact on investment suggests that political uncertainty associated with the Brexit process may, indeed, be one of the major sources of the economic cost of Brexit.”
The report echoes Bank of England analysis that suggested around £40 billion per year, or £800m a week, of lost income for the country as a whole since the result of the leave vote.
Goldman added that under a no-deal scenario, favoured by the most extreme Tory Brexiters, the UK will be a big loser, but its European neighbours would also suffer.
It said: “Under our ‘no-deal’ scenario, the UK suffers large output losses, in conjunction with a substantial global confidence shock marked by a sharp sterling depreciation. European countries would be most exposed to this scenario and could see output losses of around 1 per cent of real GDP.”
Conversely, a “status quo” Brexit transition deal would reverse part of the UK’s output underperformance and, under a remain scenario, the UK “fully recoups Brexit-related output costs and business confidence rebounds”.
Separate figures yesterday showed Brexit stockpiling helped fuel a surge in manufacturing output last month as firms sought to avoid being caught short ahead of what was supposed to be Britain’s departure from the EU.
The Markit/CIPS UK manufacturing purchasing managers’ index showed a reading of 55.1 last month compared with the 52.1 recorded in February. It represents a 13-month high and beat expectations from economists, who forecast a reading of 51.2. A figure above 50 indicates growth.
Rob Dobson, director at IHS Markit, which compiles the survey, said: “Output, employment and new orders all rose as manufacturers and clients raced to build safety stocks. Stocking of finished goods and input inventories surged to new survey-record highs.”