Brexit vote has cost UK economy £40bn per year; much more than the divorce bill
If you think Brexit hasn’t truly hit the UK economy, think again.
The Bank of England estimates that uncertainty stemming directly from the Brexit referendum has cost the British economy £40bn ($51.5bn) per year, according to Gertjan Vlieghe, who is part of the central bank’s key monetary policy committee.
In a speech on Thursday, Vlieghe outlined that the Bank of England calculated the UK economy took a 2% hit since the Brexit vote compared to where it otherwise would have been.
“That amounts to around £40bn per year, or £800m per week of lost income for the country as a whole,” he said.
Growth in Britain’s economy slowed considerably at the end of last year, putting a drag on UK gross domestic product (GDP) for the entire 2018. GDP grew by just 1.4% in 2018, the weakest level since 2009, according to the Office for National Statistics.
This slowdown came as Europe’s economy also weakened, with the European Union posting growth of 1.9% last year. This led Brexit supporters to blame outside factors for the weakness in the UK.
People voting to leave the European Union in 2016 had been spurred on by promises from Brexiteer campaigners that ditching EU membership meant the UK could stop sending vast sums of money to the bloc.
A famed “Brexit bus” was emblazoned with the words: “We send the EU £350 million a week. Let’s fund our NHS instead. Vote leave. Let’s take back control.”
That £350m figure was widely discredited, with the UK Statistics Authority saying the statement was “misleading” because it didn’t take into account the money that the UK received back from the EU.
“Given the high level of public interest in this debate it is important that official statistics are used accurately,” said Andrew Dilnot, the chair of the UK Statistics Authority, in a pre-referendum letter in 2016.
The £39bn Brexit bill
The UK is still expected to pay a so-called “divorce bill” worth an estimated £39bn to the EU as part of prime minister Theresa May’s Brexit deal.
This amount is meant to cover the UK’s share of its EU spending commitments that it made whilst it was an EU member. The money won’t be paid all in one go, but most of it is expected to be paid in the next four years.
If the UK parliament does not approve May’s Brexit deal, the financial settlement “will not become legally binding,” according to researcher Matt Keep in the House of Commons Library. So it’s possible the country could leave the EU without paying the bill.
Even so, the UK is still expected to make some form of payout to avoid angering its powerful ally and largest trading partner.
“The government’s view is that it has financial obligations that it will meet and not doing so could see the UK portrayed as an unreliable partner,” Keep said in his December report.
The UK is set to leave the EU on 29 March 2019 at 11PM local time.
READ MORE: We are all £1,500 worse off since the Brexit vote, says think tank