Brexit’s impact on economy ‘will be worse than pandemic’

THE impact of Brexit on the UK economy will be worse in the long run than the coronavirus pandemic, a forecaster has predicted.

Brexit will impact the UK’s potential gross domestic product (GDP) by about 4% in the long term while the pandemic’s impact will be 2%.

GDP or Gross Domestic Product is one of the most important ways of showing how well, or badly, an economy is doing. It is a measure – or an attempt to measure – all the activity of companies, governments and individuals in an economy.

The chairman of the Office for Budget Responsibility Richard Hughes told the BBC: “In the long term it is the case that Brexit has a bigger impact than the pandemic.”

Speaking after Wednesday’s Budget, Mr Hughes said data showed the impact of Brexit was “broadly consistent” with the OBR’s assumption that the leaving the EU would “reduce our long run GDP by around 4%”.

“We think that the effect of the pandemic will reduce that (GDP) output by a further 2%,” he added.

During the budget, Chancellor Rishi Sunak said the OBR had said they expected the recovery to be quicker.

“Growth this year is revised up from 4% to 6.5%.

“The OBR then expect the economy to grow by 6% in 2022, and 2.1%, 1.3% and 1.6% over the next three years. In July last year, at the height of the pandemic, unemployment was expected to peak at 12%.

“Today, the OBR expect unemployment to peak at 5.2% that means over two million fewer people out of work than previously feared and wages are rising.

“Compared to February 2020, they have grown in real terms by almost 3.5%”.