Leaving EU to bring 'more pain' to UK consumers
Brexit has hurt the UK economy and, in the long term, more pain is on the cards, according to analysis by a government-funded academic think tank.
The report by The UK In A Changing Europe, published yesterday, assesses Brexit's actual and future effects on inflation, productivity, public finances, and exports and imports.
"There is little doubt that the impact of the Brexit vote on the UK economy has been negative," the report, called The Brexit Scorecard, finds.
"While huge uncertainties remain about the long-term economic impacts of Brexit, it seems highly unlikely to be positive. The question is how large the damage will be," it adds, noting a no-deal exit poses particular risks.
The slide in sterling since the referendum has pushed up prices without doing much to boost UK exports, while wage growth has lagged behind inflation, the analysis has found.
Authors cite estimates by the London School of Economics and Political Science that the resulting higher consumer prices were costing the average UK household an additional £870 per year by June 2018.
After depreciating sharply in the days following the vote, the pound has remained around 10% below its pre-referendum value. "Of course, higher prices do not make consumers worse off if accompanied by higher incomes. But there is no evidence that the referendum has increased nominal incomes," the authors write.
But the Brexit hit spreads far beyond consumers. The report quotes calculations by John Springford, deputy director of the Centre for European Reform, suggesting that the UK economy is 2.5% smaller than it would be had Britain voted to remain in the European Union.
The authors also note a "clear consensus" among economists that Brexit will damage UK productivity.