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Reuters: Brexit anniversary in the UK - three years of economic decline

31-1-2023 |

Three years after its departure from the European Union, Britain is yet to benefit from the Brexit dividend that was promised for its economy as it lags its peers on multiple fronts, including trade and investment.

Britain exited the EU on Jan. 31, 2020, though remained in the bloc's single market and customs union for 11 more months.

On that day, then-Prime Minister Boris Johnson said the country could finally fulfil its potential and that he hoped it would grow in confidence with each passing month.

So far, the opposite has happened, with a range of indicators showing under-performance compared with other economies.

Opinion polls show Britons who regret leaving the EU increasingly outnumber those who do not. A survey published on Monday by news website UnHerd showed this was now the case in all but three of 632 parliamentary constituencies analysed.

The government, led by Brexit-supporting Prime Minister Rishi Sunak, says Britain is prospering with new-found freedoms.

Last week, finance minister Jeremy Hunt challenged the talk of decline and said Brexit offered a brighter future with room for measures that will attract investment in areas such as the green economy and tech.

Many economists say leaving the EU is not the sole cause of Britain's woes - the country was hit hard by the coronavirus pandemic and the surge in gas prices after Russia's invasion of Ukraine - but it is a factor that can help explain recent underperformance.

"If you impose barriers to trade, investment and migration with your biggest trading partner (EU), then you're going to have quite a big hit to trade volumes, and to investment and to GDP," he said, pointing to a string of dismal economic data.

Britain was the only Group of Seven advanced economy yet to regain its pre-pandemic size of late 2019 at the end of September last year, the most recent period covered by data.

On Tuesday the International Monetary Fund said it expected Britain's economy to shrink by 0.6% this year, in contrast to predictions of growth across the rest of the G7.

Springford estimated that Brexit reduced Britain's economic output - compared with what it would have been without leaving the EU - by around 5.5% as of mid-2022, based on a "doppelganger" model in which an algorithm selects countries whose economic performance closely matched pre-Brexit Britain.

The government's own forecasting organisation, the Office for Budget Responsibility, and the Bank of England also judge there to be a long-running net cost to leaving the EU.

Source: Reuters