Brexit may have already cost UK households £600 - thinktank

Posted On: 
31st October 2017

The average British household may have lost more than £600 each because of the vote for Brexit, according to a leading thinktank.

NIESR revised down its forecast for UK growth to 1.25%
Credit: 
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The National Institute of Economic and Social Research (NIESR) said it was “almost certain” that the fall in living standards over the past year is down to the decision to quit the EU.

The value of the pound fell in the immediate aftermath of the referendum result and has dropped at various points since during the course of the exit negotiations.

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NIESR revised down its forecast for UK growth to 1.25% a year for the next five years – a lowering of around 0.25 percentage points.

It said a worsening forecast in economic productivity was the key factor in the downgrade.

Dr Gary Young from the thinktank said: “It is almost certain that the relative deterioration in the UK economy and the accompanying fall in living standards over the past year are a consequence of the vote by the British people to leave the European Union.

He added: “Had Sterling not depreciated and the economy continued to grow at its previous rate, as would have been likely with an improving global backdrop, real household disposable income per head might have been more than 2% higher than now, worth over £600 per annum to the average household.”

The analysis by NIESR assumes the UK will negotiate a free trade deal with the EU and enjoy an implementation period of at least two years.

Dr Young urged Philip Hammond to consider falling productivity ahead of the Budget this month and suggested he might wish to “relax fiscal austerity a little while maintaining long-term fiscal discipline”.

Established in 1938, NIESR is the oldest independent economic research thinktank in Britain.