Theresa May’s Cabinet will meet this afternoon to discuss whether or not to approve the draft Brexit deal agreed by UK and EU negotiators. The prime minister could have a tough fight on her hands, as she tries to appease the hardline Brexiteers and the remainers in her group of senior ministers. With Britain due to leave the European Union in March 2019, the hope will be to secure a deal before time runs out.
How much has Brexit cost the UK so far?
Brexit is costing the UK £500 million a week – or £26 billion per annum, according to research by the Centre for European Reform.
The UK economy is 2.5 percent smaller than it would be if the UK had voted to remain in the European Union, the thinktank said.
The cost of Brexit is growing, despite Brexiteers promising a dividend of £350m a week for leaving the EU – a campaign promise the Leave side famously declared on a Vote Leave bus.
The analysis found the UK’s deficit would largely have been eliminated in the 2018-19 financial year if Britain had voted to Remain.
The cost of Brexit already exceeds the size of the budget contributions Britain made to the EU.
CER Deputy Director John Springford said: “Two years on from the referendum, we now know that the Brexit vote had seriously damaged the economy.
“We know that the government’s Brexit dividend is a myth: the vote is costing the Treasury 440 million pounds a week, far more than the UK ever contributed to the EU budget.”
The CER used a statistical model that compared the UK’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.
An earlier estimate in the summer suggested that Britain’s economy was 2.1 percent smaller than it would have been by the end of the first quarter of 2018.
The model also suggests the deficit would be down to just 0.1 percent of GDP or £2bn had Britain not voted to leave.
It would mean the austerity drive in place since 2010 would be all but complete.
The group said its analysis was based on 22 advanced economies whose characteristics closely matched Britain and that did not vote the EU.
They then compared it with Britain’s actual economic performance since the vote.
British economic growth in the first half of this year was the weakest of six-month period since the second half of 2011 and companies were cutting investment, suggesting companies were taking a cautious approach before Brexit.
Governor of the Bank of England Mark Carney said the 2016 vote meant households were £900 worse off than they would have been had the UK remained in the EU.
He said this was already “an awful lot of money” for households struggling with high inflation and stagnant wage growth.