The National Bureau of Economic Research recently released a working paper looking at The Economic Impact of Brexit on the UK. They set out to use various simulations and estimation techniques as to estimate what would have happened had Brexit never happened.
It doesn’t make for pleasant reading and undoubtedly helps explain some of the current mess that our country appears to be in. Whilst I haven’t been through the whole thing in detail as yet, in the abstract we learn that:
These estimates suggest that by 2025, Brexit had reduced UK GDP by 6% to 8%, with the impact accumulating gradually over time. We estimate that investment was reduced by between 12% and 18%, employment by 3% to 4% and productivity by 3% to 4%. These large negative impacts reflect a combination of elevated uncertainty, reduced demand, diverted management time, and increased misallocation of resources from a protracted Brexit process.
Back in the days of the referendum, the folk who raised concerns and produced analysis suggesting that there would likely be some adverse economic impact from disassociating ourselves from our nearest trading partner et al were often accused by the more rabid Brexiteers as creating a “project fear”, i.e. making fake doom-laden predictions just to scare the population from not voting exactly as the likes of Farage, Johnson et al wanted them to.
It turns out that some of the forecasts were in fact wrong in the longer term. But wrong in the other direction; underestimating the damage that would be done to the UK economy.
Comparing these with contemporary forecasts…shows that these forecasts were accurate over a 5-year horizon, but they underestimated the impact over a decade.