Real GDP has underperformed similar nations by 5% since 2016; Pandemic, energy crisis also played a part, bank says in note
The UK’s decision to leave the European Union shrank the British economy by reducing growth and spurring higher inflation, according to economists at Goldman Sachs Group Inc. who compared the country’s performance to similar nations since the referendum in 2016.
The UK’s real GDP has underperformed by about 5%, Sven Jari Stehn and colleagues said in a research note published late Friday. Reduced international trade, weak business investment and a drop in migrants coming from Britain’s largest trade partner have all contributed, they said.
“The evidence points to a significant long-run output cost of Brexit,” they wrote. “The UK has significantly underperformed other advanced economies since the 2016 EU referendum.”
Goldman’s conclusion is broadly in line with other estimates of the impact of Brexit. The UK’s official fiscal watchdog, the Office for Budget Responsibility, said last year Britain’s EU exit likely reduced economic output by 4%. Bank of England policymaker Jonathan Haskel, said a year ago that Brexit had cost every British household £1,000 ($1,260) on average.
Prime Minister Rishi Sunak has struggled to deliver on his pledge to grow the economy since taking office in late 2022. Economists are split on whether data this week will show the UK tipped into a technical recession late last year...
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