The UK is now at a permanent disadvantage to competitors in the single market

This week’s chart comes from the latest assessment of the effects of Brexit (up until June 2022) by John Springford at the Centre for European Reform think-tank. The headline number is a 5.5 per cent (£33bn) negative hit to GDP in the second quarter of 2022, when compared with remaining in the EU single market.

Springford arrives at these numbers by comparing the actual post-Brexit UK economy against a “doppelgänger” UK, which is created by synthesising the performance of similar-sized economies that were not subjected to the effects of Brexit.

The method has been criticised by some leading Brexiter economists, but has been cited by the Office for Budget Responsibility. Of course, we can never actually live the counterfactual of remaining in the EU, but you can read more here about why Springford (and others) say this method is useful in measuring the effects of Brexit.

...Springford points to the flatlining of investment in the real-UK after 2018 as clear evidence of these more dynamic impacts, with the actual UK underperforming the “doppelgänger” by 11 per cent (or £12bn) in the second quarter this year.

“You can see the Brexit effect most clearly in the investment figures,” he tells me, “The UK has a decent recovery until 2016 and then it flatlines, which doesn’t happen in other economies.

“Such a terrible investment performance is a reason to believe the numbers generated by static forecasting were probably understating the long-run impacts of Brexit, and support the higher numbers generated by models like mine.”