The investment bank said that Brexit has cost Britain about 2.4 per cent of gross domestic product, compared with a hypothetical “Doppelgänger” economy that did not withstand a Brexit shock. Its estimates suggest that the UK economy has underperformed other advanced economies since mid-2016 as a result.
Sven Jari Stehn, Goldman economist in London, said the “output losses have been concentrated in investment and private consumption”.
“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,” he said. [...]
The investment bank noted that Brexit uncertainty has also affected other major economies, particularly those with close trade ties to the UK.
“We find that the drag from weaker UK growth has been felt most strongly in countries with larger export exposure to the UK such as Germany and France,” said Mr Jari Stehn.
He added: “The global confidence shock, on the other hand, had the largest impact on Italy and Spain — on account of the pronounced sell-off in risk assets. The effects of the global confidence shocks have also reached further afield, with Japan, the US and Canada experiencing a GDP drag.”
Goldman said that a “status quo Brexit transition deal” could reverse part of the UK’s underperformance, while, if the UK remained in the EU, Brexit-related output costs could be fully recouped and business confidence rebound.
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