Brexit and Covid-19 have reduced UK GDP by 5.2%

Covid-19 made it hard to isolate the impact of Brexit on the UK economy. But now that the most advanced economies have re-opened and have surpassed their pre-pandemic level of output, we can compare their performance to that of the UK. In a new report, ‘What can we know about the cost of Brexit so far?’, John Springford of the Centre for European Reform has estimated ‘doppelgängers’ – baskets of rich countries with the most similar economic characteristics to the UK – to estimate how far Britain is lagging behind. In the final quarter of 2021, UK GDP was 5.2 percent smaller than the model, doppelgänger UK; investment was down by 13.7 percent, and goods trade by 13.6 percent.

Not all of the weakness in GDP can be ascribed to Brexit, but most of it can. Britain had an exceptionally large recession in 2020. But the UK’s early vaccination campaign meant its restrictions ended sooner than in many peer economies.

“Brexit is the main reason why Rishi Sunak is raising taxes to their highest share of GDP since the 1960s. While the Chancellor says increased national insurance contributions will fund the health service and social care, these tax rises would not have been needed if the UK had stayed in the EU,” John Springford said.

(WBJ)