True cost of Brexit vote 'is £440m every week'

Press quote (The Times)
23 June 2018

The economy is 2 per cent smaller than it would have been had Britain not voted for Brexit, a leading think tank has claimed. The Centre for European Reform (CER) said that the performance of the economy, compared with what it would have been if the 2016 referendum had gone the other way, was significant.

The government’s argument that there would be a “Brexit dividend”, out of which it would help to fund a large increase in spending on the NHS, was wrong, it said.

The pro-European think tank, which is an independent, private not-for-profit body supported by corporate donors such as Apple, Barclays, BP and Goldman Sachs, said that its 2.1 per cent estimate of lost growth equated to a hit to public finances of £23 billion a year, or £440 million a week.

“While the economy outperformed expectations in the aftermath of the referendum, since then the UK has dropped below Italy to become the slowest-growing economy in the G7,” the think tank said in a report.

John Springford, deputy director of the CER and author of the analysis, said: “Two years on from the referendum, we now know that the Brexit vote has seriously damaged the economy.

“And we know that the government’s ‘Brexit dividend’ is a myth. The vote is costing the Treasury £440 million a week, far more than the UK ever contributed to the EU budget.”

The centre made its assumptions about how much Britain would have grown by looking at which developed countries’ GDP, consumption and investment data best mirrored the performance of the British economy in the 20 years running up to the referendum.

Government estimates of the impact of Brexit were leaked in January. The paper, EU Exit Analysis: Cross Whitehall Briefing, said that a “no deal” scenario, under which Britain reverted to World Trade Organisation rules, could reduce economic growth by eight percentage points over the next 15 years, compared with present forecasts.

A free-trade agreement with the EU could lead to growth being five percentage points lower over the same period. The soft Brexit option of single market access through membership of the European Economic Area would reduce growth by two percentage points.

The findings painted a starker picture than the Treasury’s “Project Fear” document in 2016.