London mayor Sadiq Khan says Brexit cost UK over US$178 billion so far: ‘obvious it isn’t working’

Britain’s departure from the European Union has reduced the size of its economy by 6 per cent, London mayor Sadiq Khan said
Khan, a member of the opposition Labour Party, which voted against Brexit, based his statement on a report he commissioned from consultants Cambridge Econometrics

Britain

Reuters

Published: 7:20pm, 11 Jan 2024

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Britain’s departure from the European Union has reduced the size of its economy by 6 per cent so far – an annual cost of 140 billion pounds (US$178 billion) – London mayor Sadiq Khan said on Thursday, with the shortfall seen reaching 10 per cent by 2035.

Khan, a member of the opposition Labour Party, which voted against Brexit in a 2016 referendum, based his statement on a report he commissioned from economic consultants Cambridge Econometrics, who estimated how fast the economy would have grown if Britain had voted to stay in the EU.

“It’s now obvious that Brexit isn’t working. The hardline version of Brexit we’ve ended up with is dragging our economy down and pushing up the cost of living,” Khan said in remarks released before a speech he is due to give later on Thursday.

London’s economy is £30 billion smaller – about 7.5 per cent – than its projected size if the UK had remained in the EU, the study concluded.

The analysis by Cambridge Econometrics estimated that Britain’s economy would have missed out on more than £300 billion by 2035 if no action is taken, with the capital’s economy missing £60 billion.

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The study also found that the average Londoner was nearly £3,400 worse off last year due to Brexit, with almost 300,000 fewer jobs present in the capital.

Howard Cox, a rival mayoral candidate for Reform UK – the right-wing party founded by the Eurosceptic populist Nigel Farage – called the estimates “fantasy economics … not born out by any sort of reality”

Labour has a big lead over Prime Minister Rishi Sunak’s Conservatives before an election, which Sunak intends to call in the second half of this year.

However, Labour Party leader Keir Starmer has been cautious about giving details of how he would strengthen ties with the EU.

Cambridge Econometrics’ estimate of the costs of Brexit is higher than some other recent ones.

Britain’s National Institute of Economic and Social Research (NIESR) estimated in November that Brexit had reduced the size of the economy by 2 per cent to 3 per cent, with the impact expected to rise to 5 per cent to 6 per cent by 2035.

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Jonathan Haskel, a Bank of England policymaker, estimated in a private capacity last year that Brexit had damaged business investment enough to lower GDP by 1.3 per cent by the end of 2022 – equivalent to 1,000 pounds per household per year.

Cambridge Econometrics said Brexit was expected to lower annual economic growth in Britain by 0.4 percentage points between now and 2035, lower employment levels by 3 million by 2035 and reduce investment by a third.

Assessing the implications of Brexit has been complicated by the Covid-19 pandemic just months after Britain formally left the EU in January 2020.

Net migration to Britain has soared, as a new system of work visas led to a big rise in immigration to Britain from outside the EU, outweighing a fall in the number of immigrants from the EU who previously did not need visas.

Additional reporting by Agence France-Presse