The addition is salt. Leaving the EU would have cost the UK £33 billion, or more than €37 billion. This is the conclusion of the Center for European Reform (CER), a think tank dedicated to the EU in London, Brussels and Berlin, in its estimate published on Wednesday. According to CER, UK GDP is 5.5% lower in the second quarter of 2022 than if the country had remained in the EU. The gap between the economy of a UK in the EU and outside the EU is felt from the start of the country’s exit from the Union, that is, from the Brexit work. Since then, it has slowly expanded and today stabilizes at about 5% below the GDP that the country should have had.
To establish these estimates, since 2018 the CER has relied on the economies of 22 countries with growth similar to that experienced by the UK before leaving the EU and combines these 22 curves into one using an algorithm. The CER then compares, in three separate curves, the development of GDP, investment and trade in UK goods and services with the curve for the 22 countries, which represent the economy that the UK would have had without the divorce from Brussels. The 22 countries are Western powers, including a majority of European countries (France, Germany, Belgium, Italy, Spain, etc.) as well as Australia, Canada, Japan and New Zealand.
The curve documenting the investment follows the same logic: a stall at the time of Brexit and a gap of 11% today, a loss of £12bn for London. The country has also drawn a limit below £15 billion in trade in goods since leaving the Union. CER explains this discrepancy mainly with the lower number of tourists in the United Kingdom than in the 22 countries analyzed for the comparative curve.
The center also points out that Brexit has led to tax increases. In March 2022, Rishi Sunak, then Chancellor of the Exchequer (equivalent to Chancellor of the Exchequer), unveiled a plan of tax increases that would bring London £46 billion over two years. However, if the UK had not left the EU, its GDP would be higher than it is today, and these tax increases, at an identical rate, would have allowed it to collect almost £40bn (€46bn) more.
Two years after the effective exit from the EU, the consequences of Brexit are still strongly felt across the Channel. Still in mid-November, another survey placed London second in the stock market behind Paris for the first time, with a gap of $2 billion in market capitalization. While the Conservatives in 2016 assured it “Food will be cheaper. Energy and fuels will be cheaper. Taxes will be lower. the reality is the opposite. The Covid-19 crisis has certainly brought a halt. Like its neighbours, the UK found itself with plummeting GDP in 2020 and enduring the consequences of its slowing economy for many months. Barely recovered, the country was hit by the energy crisis caused by the war in Ukraine that broke out in February 2022. Result: Inflation reached 11.1% over the year in October, the highest level since 1981 in the country. In 2022, gas prices rose almost 130% as electricity rose 66%. All this caused a political crisis that forced Prime Minister Liz Truss, who had a program based on unrealistic tax cuts, to resign in October. To cope, the Rishi Sunak government presented an austerity budget in November based on tax increases and cuts in public spending. What is the share of Brexit in the current economic situation in the UK? Difficult to quantify, if the country is not the only one in Europe suffering from the consequences of Covid-19 and the war in Ukraine, it is facing the consequences of its exit from the EU, these crises feed on one and the other.