The economic cost of Brexit has already hit £130 billion with a further £70 billion set to be added by the end of this year.
Research by Bloomberg Economics shows the British economy is now 3 per cent smaller than it could have been had the relationship with the EU been maintained.
Business investment in particular has been held back, and annualized economic growth has halved to 1 per cent from 2 per cent.
Uncertainty continues to take its toll
Dan Hanson, UK economist for Bloomberg Economics, puts the total cost of Brexit by the end of 2020 at £200 billion as uncertainty continues to take a toll on companies and consumers.
Despite the imminent threat of a no-deal split being removed, Boris Johnson still has to negotiate new trading arrangements that creates another potential cliff edge at the end of the year.
And despite tax cuts and increased borrowing for investment being on the Conservative’s agenda, none of the ground lost since 2016 is likely to be made up.
Shot in the arm
Hanson said: “Looking beyond 2020, we forecast the growth spurt in this year will be a one off — the economy will get a shot in the arm, but the cyclical lift that provides won’t last.
“As the UK comes to terms with its new trading relationship with the EU and grapples with the productivity challenge that has hindered growth since the financial crisis, the annual cost of Brexit is likely to keep increasing.”
The British government was dealt a blow this week after the Australian government rejected a UK offer that included visa-free work and travel between the two countries.
Trade minister Simon Birmingham said full free movement would not be accepted because it could cause an exodus of highly trained workers to the UK and an influx of unskilled British workers to Sydney and Melbourne.
Last year, ministers in New Zealand voiced similar fears of a brain drain.