In January 2020, The UK decided to withdraw from the European Union and European Atomic Energy Community. Brexit refers to this withdrawal. Right after two months of the UK’s withdrawal from the European Union, the tragic consequences are becoming clearer.
The general analysis of the economist is that Brexit has turned out to cause poor stability in the UK. However, the clear impact of Brexit will not be enough clearer in the few years ahead. Currently, the recession caused by to COVID-19–19 pandemic is also mixed up with the Brexit consequences. So, it is too early to say a verdict about how much will Brexit cost the UK.
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In today’s blog, we will focus on the following:
- Pre-Pandemic Analysis
- Brexit And Inflation
- Trade Issues Due To Brexit
Pre-Pandemic Analysis:
According to research by the Center For Economic Policy, economic growth has gone low by 2 per cent. Which is almost 350m pounds every week. Unfortunately, it is the same amount that the leave campaign suggested misleadingly.
The UK will be able to save from European Union Budget Contributions and use more productively. This way was suggested to fund the NHS. An estimate by the European Commission says that it will cost the former 2.25 % of GDP due to the departure of the UK from the European Union. Which are 40bn pounds by 2022. Whereas, the European Union will only lose 0.5 % of its GDP.
In response to how much Brexit will cost, OBR (Office For Budget Responsibility) says that after owning Brexit productivity will go low by 4 %. A major part of two-fifths is realized already. The prediction of reduced growth in the first quarter of this year by 0.5 % is already made by OBR.
Brexit And Inflation:
Where Brexit has caused a slowdown in the economy, it has also become a reason to drive inflation upwards. A lot of pressure is expected on the importers by OBR due to trade disruption. Consumers will be charged with higher costs. A 0.25 % increase is expected by the end of the year.
There is a decrease of 28.8b % in the imports from EU countries. This is the largest decrease in imports if we compare it with the rest of the world, a clear and loud answer to how much will Brexit cost the UK. This has caused worse this time due to harsh border checks for products. The consequences are loud and clear and this has affected UK exports as well. Which has gone down by 40.7 %. Office For National Statistics calls it the largest drop after 1997.
Moreover, non-European Union states are protected and remain unchanged in terms of exports.
Trade Issues Due To Brexit:
According to other countries’ analysis about how much Brexit cost the UK, the trend of export decrease is also confirmed. An example of UK exports to Germany says that it has gone down by 56% in comparison to 2020. This percentage is about January 2021. On the other hand, imports have also gone down by 29%.
Another component that proves that Brexit is the main factor behind trade issues is that non-European Union states are less affected and less disrupted even during this pandemic.
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Conclusion:
To sum up the discussion we can say to those who wonder how much Brexit cost the UK that it has affected the economy largely in this period. However, some experts are of the view that there are many years to go by this to know the consequences. We hope this blog has answered the basic queries that are frequently asked convincingly.
