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Millions of workers in Britain will be about £1,300 worse off a year due to Brexit, leading experts have said.
They highlighted the blow to people’s income, compared with what it would likely have been if the UK had not quit the European Union, its biggest trading partner.
US president Joe Biden and Prime Minister Rishi Sunak were holding talks in Belfast today, with Brexit and the Windsor Framework on Northern Ireland trade expected to be on the agenda. But claims by Brexiteers before the 2016 referendum that a US-UK trade deal would be quickly struck to make up for the lost trade with the EU have turned out to be false.
The Government’s economic watchdog, the Office for Budget Responsibility, has said that the post-Brexit trading deal reached with the EU will reduce Britain’s long-run productivity by some four per cent, compared with if the UK had remained in the bloc. It added that both exports and imports will be around 15 per cent lower in the long run than if Britain had stayed in the EU.
John Springford, deputy director at the Centre for European Reform, told the Standard: “Britain’s productivity determines how much money people are paid. So a full-time worker with average earnings will be about £1,300 worse off a year as a result of Brexit.
“The OBR’s estimate of the Brexit hit is the average of a range of forecasts undertaken by reputable economists, and isn’t definitive. The impact in the long run could be less, or more, than the OBR thinks. But if it’s right, the impact of Brexit on people’s earnings will be substantial.”
Paul Johnson, director of the Institute for Fiscal Studies, said: “Most analysis, including that of the OBR, suggests that our productivity and economic output will fall by around 4% as a result of leaving the single market.
“What does that mean? Well in the long run we will all be about that much worse off on average, so people on average sorts of earnings might be £1,000 to £1,500 worse off (before tax) than they otherwise would have been. Of course it also means less money for public services like health and education.”
The International Monetary Fund yesterday forecast that only Italy is set to have worse economic growth than Britain next year, with UK output projected to fall 0.3 per cent this year and then growing by one per cent in 2024.
Rishi Sunak has refused to acknowledge the economic blow to Britain from Brexit. Chancellor Jeremy Hunt has accepted there are some harms from quitting the EU as well as benefits. A Treasury spokesperson said: “Since leaving the single market, the UK has grown faster than France and Germany.
“The Government is making the most of our Brexit freedoms to grow the economy, including ambitious financial services sector reforms which will unlock over £100 billion of investment, and we are reviewing EU-derived rules in other critical growth sectors this year.”
However, there are fears that the City is now losing business to New York and other financial centres. Downing Street yesterday failed to give any reassurances that progress would be made on a US-UK trade pact by next year.
As Britain’s trade with the EU has been hit, ministers are hailing joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership which includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. But the Government’s own analysis suggest CPTPP membership will only boost the UK’s GDP by 0.08 per cent. Ministers insist it could be far bigger as more countries join.