Brexit costing the UK up to £90bn in lost tax a year, new analysis shows
Brexit is costing the UK up to £90 billion a year in lost tax revenue, a new analysis shows, just days before Rachel Reeves prepares to raise taxes in her make-or-break budget.
The average Briton is also thousands of pounds worse off, prompting calls for ministers to “fix our broken relationship with Europe”.
As Ms Reeves delivers her Budget on Wednesday, the government’s official watchdog is expected to confirm leaving the European Union is more disastrous than previously thought.
Last month Ms Reeves said the Office for Budget Responsibility (OBR) would be “quite forthright” about Brexit “having a greater impact on our economy than anticipated”.
A new study this month by the highly respected US think tank the National Bureau of Economic Research found that the economic damage since the Leave vote in 2016 has led to the UK’s GDP being between 6 per cent and 8 per cent smaller than it could have been.
New analysis by the House of Commons library estimates that Brexit costs the Treasury up to £90bn a year in lost tax revenue, with the average Briton seeing a hit to their per capita GDP of between £2,700 and £3,700.
Liberal Democrat leader Ed Davey, whose party commissioned the new analysis, said: “This is why we have the highest taxes ever, this is why we have sky-high bills, this is why we have a cost of living crisis.
He called on Labor to abandon its red lines and negotiate a new customs union with the EU to “fix our broken relationship with Europe”.
Sir Nick Harvey, chief executive of European Movement UK, said: “Rachel Reeves would have faced very different choices this week if the UK had not severed ties with its largest trading partner. “The bureaucracy and uncertainty of the past 9 years has hit every single one of us.
“This new analysis from the House of Commons Library shows just how much economic damage leaving the EU inflicts on us both nationally and individually. We lose billions of dollars in tax every year and we’re all several thousand pounds poorer.
“Public opinion is now clear: Brexit has been an unmitigated disaster for the UK economy. This week’s Budget will likely mean many of us will have to pay more to fill the gap in the country’s finances. It is time for the government to fully acknowledge the ongoing damage of leaving the EU and reconsider its ‘red lines’ to breathe some life back into the UK finances.”
NBER said previous estimates were accurate for the 5-year time frame but underestimated the ten-year impact.
They said previous estimates predicted an average hit to GDP of around 4 percent; That figure is close to the 4 to 6 percent impact they predicted by 2021, five years after the 2016 election. They added: “However, we see our long-term forecast for the impact of Brexit on GDP to be more negative, at between 6 per cent and 8 per cent.”
Treasury declined to comment.
