When EU fiscal rules meet industrial policy

But how would the UK have fared had it never left the European Union? It’s impossible to say for sure as we cannot let history run twice, but John Springford of the Centre for European Reform is trying to come as close as possible to re-running history by using a ‘doppelgänger’ method.

For this, he lets an algorithm select countries whose economic performance closely matched the UK’s performance before Brexit. He then compares how this doppelgänger mix of countries that did not leave the EU fared after Brexit with the economic performance of the existing Brexit Britain.

Perhaps unsurprisingly from a Brussels perspective, the results do not look good for Brexit Britain. By the end of the second quarter of 2022, UK GDP is 5.5% lower than that of its Bremain doppelgänger.

Moreover, Springford’s study finds that investment is 11% lower and trade in goods is 7% lower, while trade in services has held up.