EU Divorce Costing Britain Growth $285m Per Week

Voting to leave the European Union has cost Britain more than £200 million ($285 million) a week in lost growth, the governor of the Bank of England believes.

Bank of England Governor Mark Carney told business leaders that the 2016 Brexit vote is costing Britain’s economy around £10 billion ($14 billion) a year, Reuters quoted the Times newspaper as saying.

Carney was asked by an attendee at a meeting on the sidelines of the World Economic Forum in Davos to quantify lost economic growth since the referendum, the newspaper said.

While Britain’s economy has performed better than the BoE forecast after the June 2016 referendum, it grew at the slowest pace of all Group of Seven rich economies over the first three- quarters of 2017.

Carney said he thought the loss to economic growth was equivalent to between two-thirds and three-quarters of the weekly £350 million boost to public spending that Brexit supporters said was a key advantage of Brexit, the Times reported.

Government statisticians have accused Britain’s Foreign Minister Boris Johnson of misusing state data by repeating the £350 million-a-week figure.

The estimate is lower than some of the wild predictions made by the Remain campaign before the referendum but will undermine the foreign secretary’s claim that the UK will enjoy a Brexit dividend to help to fund the National Health Service.

The £200 million figure is not directly comparable to the Leave campaign’s £350 million because the former refers to lost growth while the latter was money available for government spending. The £10 billion of lost growth equates to 0.5% of GDP and the impact on the public finances would be considerably smaller.

That the governor should believe Britain has lost ground since the vote, compared with where the economy would otherwise be, is not surprising. The Bank and the Office for Budget Responsibility both downgraded growth after the referendum, as did the main international institutions.

The latest estimates are that the economy grew 1.8% in 2016 and about 1.8% last year. The OBR forecasts growth of only 1.4% this year. The International Monetary Fund has upgraded global, US and European growth but downgraded the UK claiming that it was being left behind as the world enjoyed the “broadest synchronized growth surge since 2010”.