The British economy is suffering from the long-term cost of Brexit and has “significantly underperformed” compared with its peers, analysis from investment bank Goldman Sachs has revealed.
A note published late on Friday shows the UK’s decision to leave the European Union could have pinned back the country’s economic growth significantly, leading to an overall reduction of 5 per cent.
Sven Jari Stehn and colleagues said reduced international trade, weak business investment and a drop in migrants coming from Britain’s largest trade partner have all contributed to suppressed growth.
“The evidence points to a significant long-run output cost of Brexit,” they wrote. “The UK has significantly underperformed other advanced economies since the 2016 EU referendum.”
Goldman’s conclusion is broadly in line with other estimates of the impact of Brexit.
The Office for Budget Responsibility said last year that Britain’s EU exit likely reduced economic output by 4 per cent, while Bank of England policymaker Jonathan Haskel has said that Brexit has cost every British household £1,000 on average.
Official figures out Thursday will show whether the UK has slipped into recession.
Sunak promised to grow the economy as one of his five pledges, but if the Office for National Statistics’ (ONS) gross domestic product data for the final three months of last year shows a contraction, it means the UK was in a recession after two consecutive quarters of negative growth.