Brexit Cost UK £1,000 Per Household, Says Bank Of England Economist

Jonathan Haskel says investment was "stopped in its tracks" after the referendum.
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Brexit caused investment in UK businesses to plateau and delivered a productivity penalty worth £1,000 per household, a Bank of England policymaker has said.

It comes as Rishi Sunak insisted he is focused on the benefits of Brexit after it emerged Michael Gove attended a summit addressing the EU withdrawal’s failings.

Jonathan Haskel, an external member of the Bank’s Monetary Policy Committee (MPC), said on Monday a wave of investment was “stopped in its tracks” in 2016 following the referendum result.

Haskel was asked by The Overshoot what he thought about Britain being an “extreme outlier” when it comes to facing a slowdown in productivity.

He said: “Yes, we suffered much more. A bit of that is that we have this larger financial sector. But I think it really goes back to Brexit.

“If you look in the period up to 2016, it’s true that we had a bigger slowdown in productivity up to 2016, but we had a lot of investment. We had a big boom between 2012-ish to 2016.

“But then investment just plateaued from 2016, and we dropped to the bottom of G7 countries.”

Haskel went on: “I say we were at the top of the wave of investment in 2012. If we pushed that out a little bit, then our slowdown may not have looked quite so bad, but it was stopped in its tracks in 2016.”

The influential economist explained that the Brexit referendum had an impact on productivity as a result of the reduction in trade, with the UK opting to leave the European Union (EU) and consequently secure new trade deals.

Haskel referred to a calculation to show what the UK economy could have looked like if investment had carried on growing at the “pre-referendum” rate, compared with what it actually is.

He described the hit as the “productivity penalty”, which amounts to about 1.3% of gross domestic product (GDP). “That 1.3% of GDP is about £29 billion, or roughly £1,000 per household,” he said.

The Observer revealed on Sunday that Gove, the levelling up secretary and leading Brexiteer, attended a cross-party gathering at the Ditchley Park retreat in Oxfordshire last week.

Labour frontbenchers David Lammy and John Healey attended as did former Tory party leader Lord Michael Howard and ex-Conservative chancellor Lord Norman Lamont.

No.10 suggested the prime minister had not been aware of the summit until the news emerged at the weekend, adding that “it wasn’t a government-organised event”.


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