Brexit has cost the UK government the grand total of £40 billion in lost tax revenue, according to new (exceptionally bleak) estimates.
Amid the cost of living crisis and pressures on global energy supply triggered by Russia’s invasion of Ukraine, the UK has been facing an additional strain – life outside of the EU.
Polling company YouGov already found in November that one in five who voted for Brexit now believe it was the wrong move, which was a record low for the first time since the UK left the bloc back in December 2020.
And this new data is unlikely to win over any extra support.
John Springford, deputy director for the Centre for European Reform (CER) has used a modelling system from 2018 to look at the difference between the current UK economy outside of the EU compares to a UK which may have stayed in the bloc.
He believes the economy is now 5.5% smaller than it would have been if the UK had remained part of the EU.
This means the UK’s economic output was £33 billion less than if we had stayed in the EU between April and June alone.
This works out to £12 billion in lost tax revenues just for that quarter – working out to £40 billion for the year to the end of June 2022.
Springford compiled the hypothetical data by looking at countries which had a similar economy to the UK prior to Brexit, such as the US, Germany, New Zealand, Norway and Australia, and creating a “doppleganger” projection of where the UK could be right now.
Springford acknowledged that there are “always errors around estimates”, but he is “reasonably confident” in his findings.
He continued: “There is a gap between the things politicians want to say about Brexit and what the data tells us. I think it’s become impossible to argue that Brexit has not hurt the UK economy.”
He pointed out that back in March, then-chancellor Rishi Sunak accepted the Office for Budget Responsibility’s projection that the economy would be 4% smaller over the 15 years from 2016, reducing £100 billion from the economy.
Sunak then increased tax by £46 billion as a result, to keep public services afloat – but Springford said: “Almost all of those tax rises wouldn’t have been needed if Britain had remained in the EU.”
Springford claimed “there can be no doubt” that the UK economy is smaller now, because of Brexit.
“All reputable forecasters, analysts, pretty much agree that Brexit has had a negative economic effect on the British economy.
“It was a decision from the UK government that they wanted to take back as much control as possible, and they were going to sacrifice some economic activity as a result of that.
“It’s best for the government just to be open and straightforward about that decision, I think.”
However, a Treasury spokesperson replied: “We do not recognise this analysis.
“The UK had the fastest growth in the G7 last year and the IMF has forecast the same in 2022.
“We are taking full advantage of the opportunities of Brexit, for example through reforming EU-derived rules for insurers to unlock £100 billion into infrastructure over the next decade and by setting a skills-based migration policy which suits the UK’s needs.
“The government is determined to drive growth by tackling inflation, investing in infrastructure and innovation, and getting our people back to work.”
Chancellor Jeremy Hunt has also refused any claims that Brexit has hit the economy, while Labour leader Sir Keir Starmer has said he will not take the UK back into the EU single market to product growth if he wins the next general election.
CER previously found at the end of 2021 that the UK was 5.2% smaller than if it had not left the EU, working out to a loss of around £31 billion.
This was the first year the UK was outside of the EU, and Springford believes Covid had an impact at the time – but, he thinks the most recent findings are separate from the lockdowns of 2020 and 2021.
Springford claimed that investment in the UK has “flatlined” since the 2016 vote.
He said: “It could be that most of the economic costs might have already come through. But it is also possible that the long-run costs of Brexit might be larger than the OBR estimate [of £100 billion loss].”
These estimates also come at a time when public sector workers are striking en masse over pay and working conditions and the country is teetering on the edge of a recession.
