Brexit cost revealed as UK economy took 6% hit, Bank of England data shows

Brexit cost revealed as UK economy took 6% hit, Bank of England data shows The UK economy was growing strongly prior to the vote to leave the EU - Bookmark - CommentsGo to comments Brexit has cost the UK economy at least six per cent in lost growth, an analysis of Bank of England (BoE) data shows – with external studies suggesting the true amount could be even higher. Economists looked at ten years’ worth of data and decisions from thousands of British firms, as well as the growth and economic factors that have occurred since the UK voted to leave. They also attempted to plot the path the nation might have taken if voters had opted to remain in the European Union. The consensus was a fall of six per cent from company data and an average of eight per cent when using five other analysis methods, reports BBC News. About half of the lost growth came from uncertainty following the vote, with the remainder due to increased costs and trade barriers. British professor Nick Bloom, from Stanford University, co-authored the study and concluded that “in the case of Brexit, there was a substantial economic impact on the United Kingdom, but it arose gradually over the subsequent decade”. Bloom noted the UK was growing fast prior to Brexit and could have partially kept pace with the US had the vote been to remain. But some analysts have suggested the BoE data does not fully encapsulate certain factors, such as US tech outperformance or the energy price shock across Europe as a result of the Ukraine war. “I think the level of activity and growth in the economy has been lower,” governor Andrew Bailey said recently. “And the reason for that is that if you reduce the size of the markets that we trade with, so we reduce our export markets, then that does tend to have a negative impact on growth.” He also added that the impact on financial services was “nowhere near as detrimental as many people predicted at the time”. While Bank of England data and economists were used for the study, the paper includes a disclaimer that the conclusions drawn are not necessarily those of the Bank. Analysis from AJ Bell shows that Brexit had several more tangible, individual impacts on the UK economy. Among them, head of personal finance Sarah Coles noted, was that the pound saw its biggest single-day drop for 30 years. That happened straight after the vote as traders sold out of the uncertainty, with the knock-on effect that travel for Brits was immediately more expensive. In addition, that made overseas goods and services more expensive from a pound perspective, so rising prices fed into rising inflation. Staff shortages caused rising hiring costs, smaller economic growth led to lower interest rates which hit savers in the pocket and pushed more homeowners towards fixed-rate mortgage deals. And, as has been evidenced this year, those coming to the end of ultra-low interest mortgage deals and renewing into 4 and 5 per cent deals instead, saw a big extra monthly payment needed on their homes, further hampering available household spending power. Separately on Thursday, the BoE’s Monetary Policy Committee voted to keep interest rates at 3.75 per cent. Join the community Sign up to our free Europe: The Way Back newsletter here What you will get by joining: - A dedicated community: We are fully committed to the long haul, consistently campaigning to secure the absolute best deal for Britain within Europe. - Free weekly newsletter: Every Wednesday, political editor David Maddox and political correspondent Millie Cooke will be in your inbox with exclusive reporting, analysis and insight on the biggest developments shaping relations between Britain and Europe. Each week, they will explain what’s happened, what it means, and what the key political figures, experts and decision-makers are saying about it. - Essential continental updates: Stay informed with regular briefings on the biggest developments in European politics and the specific policies that could pave the way for closer EU relations. There are even more benefits if you subscribe for just £1 for seven months: - Exclusive content: Get the highest quality analysis, opinion and debate from political experts across the UK and Europe by subscribing to our premium service. - The Brexit Effect: You'll get exclusive access to extracts from Anthony Seldon’s major new book, The Brexit Effect, offering an unparalleled analysis of the 10 years since the referendum. - Inform the debate: Receive exclusive invitations to live events, webinars, expert Q&As and podcast recordings. Join our commenting forum Join thought-provoking conversations, follow other Independent readers and see their replies Comments