Money UK has lost since Brexit vote exceeds EU budget payments, study shows

Britain has lost US$30 billion in two years, cash the government was hoping to reclaim from Europe when it leaves the bloc next March

PUBLISHED : Saturday, 23 June, 2018, 5:18pm
UPDATED : Saturday, 23 June, 2018, 5:18pm

The damage to the UK economy caused by the vote to leave the European Union two years ago already exceeds the size of the budget contributions Britain will be able to claim back when it finally leaves the bloc, according to an economic study by the Centre for European Reform.

Uncertainty caused by Brexit has already caused a 2.1 per cent dip in economic output, even before Britain’s departure next March, the CER said late on Friday in an emailed statement. That has cost the public finances £23 billion (US$30 billion) in lost tax revenue, the think tank said.

The economic damage means the Treasury has less money to spend on public services and knocks on the head the idea that Britain will enjoy a “Brexit dividend” when it no longer has to contribute to the European budget, it said.

“Two years on from the referendum, we now know that the Brexit vote has seriously damaged the economy,” said CER Deputy Director John Springford, who wrote the study. “We know that the government’s Brexit dividend is a myth: the vote is costing the Treasury £440 million a week, far more than the UK ever contributed to the EU budget.”

Foreign Secretary Boris Johnson, who spearheaded the Brexit campaign in 2016, toured the country at the time in a red bus promising to use the budget contributions of £350 million a week to fund the National Health Service instead.

In reality, Britain pays only half that amount, since it gets back around £9 billion from the EU, though that did not stop Prime Minister Theresa May touting a “Brexit dividend’’ this week when she announced a £20.5 billion boost for health care.

The CER used a statistical model that compared Britain’s economic performance against predicted output if the referendum result had gone the other way. It did so by identifying which OECD countries’ gross domestic product, consumption and investment data best replicated the UK economy in the two decades leading up to the referendum.