Former Bank of England official says Brexit ‘permanently damaged’ UK economy
A former Bank of England policymaker has said Brexit has “permanently damaged” the UK economy, as it reduced the country’s potential output and resulted in lower investment in UK businesses. .
In an interview on Bloomberg TV, Michael Saunders said Jeremy Hunt’s “austerity budget” this week was a result of leaving the European Union.
Saunders joined the rate-setting Monetary Policy Committee shortly after the Brexit referendum in 2016, and left the role in August of that year.
He said: “The UK economy as a whole has been permanently damaged by Brexit. It has significantly reduced the potential output of the economy, dampened business investment.
“If we hadn’t had Brexit we might not be talking about an austerity budget this week. The need for tax rises, the spending cuts wouldn’t have been needed if Brexit hadn’t reduced the potential output of the economy so much.
On Sunday, Hunt denied that Brexit had made Britain poorer – despite the government’s own Office for Budget Responsibility saying it had.
The chancellor, who campaigned for Remain in the 2016 referendum, insisted the UK could achieve “tremendous success” in leaving the EU.
He said it was important to consider the impact of Brexit “in the round”, and that Brexit brought both “costs” and “opportunities”.
OBR chairman Richard Hughes said last year that Brexit would cut Britain’s potential gross domestic product by 4% in the long term.
Saunders, now a senior economist at Oxford Economics, added that some of the ambitions behind Liz Truss’s failed monetary budget were “the big challenge to raise potential output”, but her “tax cuts and deregulation proposals The solution given is wrong”. .
He added: “I put a lot of emphasis on improving trade links with the EU, improving education, training, and also tackling the alarming rise in long-term illness, which is decimating the workforce. Is.”
Saunders said the economy had faced “a challenging period with the Brexit vote, the devaluation of sterling, a prolonged period of political uncertainty, the pandemic and then renewed political uncertainty”.
Last week, former Bank of England governor Mark Carney doubled down on his claims that the move had weighed on the pound, suggesting the decision to leave the EU continued to play a role in Britain’s financial woes. will keep