Brexit will have “a greater impact than the Covid-19 pandemic” on the UK economy, Richard Hughes, chairman of the public budget forecasting body OBR, said in an interview with the BBC.
Hughes said Britain’s exit from the EU would reduce “long-term GDP by about 4%”, while the impact of the pandemic would reduce it by “another 2%”, Hughes said.
The organization revised its growth forecast for this year to 6.5% from an earlier 4% and its estimate of the pandemic’s long-term impact on gross domestic product (GDP) to 2%, compared with up from 3%.
“Over time, it will become difficult to separate the effects of the pandemic from other factors such as Brexit,” the OBR warned in its report updating economic forecasts.
Despite a trade agreement between the European Union and the United Kingdom, trade in goods between the island and the mainland has declined since the effective entry of Brexit.
Britain’s exit from the European Union has also greatly complicated the entry of European workers into the UK, leading to labor shortages and disruption of the country’s supply chain.
The resumption of economic activity in the world after the lifting of several sanitation measures in the event of a pandemic leads to peak demand and overcrowding of ports or maritime transport capabilities.
In its forecast for Wednesday, the OBR forecasts a return to pre-pandemic levels of economic activity by early 2022, slowing to 6% next year.
The recovery is indeed showing signs of slowing in the UK, punished by labor shortages, rising energy prices, supply problems, not to mention high levels of new cases of Covid-19.
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