Brexit will have a bigger negative impact on the UK’s economy than the coronavirus pandemic in the long term, the chairman of Britain’s financial watchdog has said.
Richard Hughes, the boss of the Office for Budget Responsibility, said the assumption is now that leaving the EU will ‘reduce our long run GDP by around four per cent’.
He added to the BBC: ‘We think that the effect of the pandemic will reduce that (GDP) output by a further two per cent.’
Gross Domestic Product (GDP) is a measure of the size of a country’s economy.
Mr Hughes told the broadcaster: ‘In the long term it is the case that Brexit has a bigger impact than the pandemic.’
His comments came after the OBR yesterday issued an inflation warning in a report published alongside Rishi Sunak’s Budget.
The watchdog predicted inflation could jump from the current rate of 3.1 per cent to an average of four per cent over the course of next year.
It also warned that news since its report was compiled suggested inflation could actually peak at closer to five per cent in 2022.
Such a scenario would see inflation hit levels not seen for three decades.
The Bank of England’s inflation target is two per cent. Should inflation continue to spike the Bank is expected to hike interest rates.
The OBR’s Brexit prediction came as Downing Street vowed to retaliate against France if Paris goes ahead with a ‘disappointing and disproportionate’ threat to impose sanctions in an escalation of a row over fishing boats.
The French Government dramatically warned it will block British vessels from some ports next week if the post-Brexit dispute over fishing licences is not resolved.
Paris even went as far as suggesting it could restrict energy supplies to the Channel Islands if no deal is reached with the UK as relations with France further soured.
Number 10 said the threats do not seem to be compatible with ‘international law’ and vowed an ‘appropriate and calibrated response’ if Paris does not back down.Internet Explorer Channel Network