The head of the Office for Budget Responsibility told the BBC that leaving the EU would have had an impact on the UK economy equivalent to the coronavirus pandemic and would likely lead to a 4% production cut.
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The head of the Office for Budget Responsibility told the BBC that leaving the EU would have had an impact on the UK economy equivalent to the coronavirus pandemic and would likely lead to a 4% production cut.
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“It’s a shock to the UK economy as big as the other kinds of shocks we’ve seen from the pandemic, from the energy crisis,” Richard Hughes said in an interview with the BBC. “Those also had percentage point effects on the production level over five or 10 years.”
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Hughes, who heads the independent forecasting body that monitors public spending, said economic growth has also been hit by low productivity, a shrinking workforce and stagnant investment, which have constrained living standards.
The UK voted to leave the EU in 2016 and officially exited in January 2020. The departure made it harder for some businesses to find workers and harder for domestic manufacturers to sell in the EU, while also allowing the UK to seek independent trade deals from the EU. The UK is the only developed economy that has not recovered to pre-Covid levels of GDP growth, and is struggling with tightening labor market conditions with 600,000 fewer workers than before the pandemic.
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“We have seen the greatest pressure on living standards that we have ever faced in this country,” Hughes said. “While real incomes will recover in the next three or four years, it is still the case that people’s real purchasing power does not return to pre-pandemic levels until five years later.”
The Minister for Settlement, Michael Gove, said in the same programme, that both the pandemic and the war in Ukraine had had a significant impact on the economy, and that making economic forecasts was “a very difficult exercise”. When asked if the Conservative Party, which has been in power for 13 years, was responsible for the UK’s poor economic performance, he said, “One can always do better”.
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