The split with the EU has led to weaker business investment and worker shortages, according to Bloomberg
The UK economy is continuing to lose billions annually following Brexit, according to an analysis by Bloomberg Economics released on Tuesday.
The report states that the British economy is currently 4% smaller than it might have been had the country stayed within the bloc, and has been losing roughly £100 billion ($124 billion) a year after its exit from the EU in 2020.
“Did the UK commit an act of economic self-harm when it voted to leave the EU in 2016? The evidence so far still suggests it did. The main takeaway is that the rupture from the single market may have impacted the British economy faster than we, or most other forecasters, expected,” economist Ana Andrade, who co-authored the report with Dan Hanson, said.
The analysts say that the UK’s economic performance started to differ from that of the rest of the G7 countries after the 2016 Brexit referendum. They say this was caused by a drop in business investment as companies have been very cautious with spending due to uncertainty about their future outside the single market. According to calculations, the UK’s business investment currently stands at about 9% of GDP against the G7 average of 13%.
Economists also blame Brexit for the shortage of workers, which also impacts the UK economy. They estimate that there are currently 370,000 fewer EU workers in the country than there might have been if Britain hadn’t quit the bloc.
“Scarcity of labor adds to inflationary pressure in the short-term and constrains potential growth further out,” the economists wrote. “That’s not good news for an economy facing bleak long-term prospects, with trend growth of a little over 1%.”
So far, the impact of Brexit on trade has been less significant, the economists said, but warned that “over the longer term, we would expect trade to bear the brunt of the impact of leaving the single market.”