'The economy would be in better shape had Brexit not happened': Ex-Bank of England economist Michael Saunders

16 November 2022, 17:52 | Updated: 17 November 2022, 09:03

Bank of England says Brexit is to blame for 'persistent' and 'lasting' damage to the UK economy.

Madeleine Wilson

By Madeleine Wilson

Former Monetary Policy Committee at Bank of England Michael Saunders said Brexit is to blame for "persistent" and "lasting" damage to the UK economy.

This comes after the UK is set to be in stagnation and sticky inflation for the coming years, the National Institute of Economic and Social Research (NIESR) think tank has warned.

The NIESR's latest figures suggest Inflation is on course to hit around 5% next year, while Britain's economy looks set to grow by only 1.7% in 2023 and 1.3% in 2024 after rebounding by 6.9% in 2021 and 4.7% in 2022 after the COVID-19 pandemic.

Today Michael Saunders told Tom Swarbrick that Brexit is to blame for "persistent" and "lasting" damage to the UK economy.

On Thursday this week, Chancellor Jeremy Hunt is set to deliver his Autumn Statement which will unveil his strategy to tackling the UK's budget deficit.

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‘We went on a relatively hard fall with Brexit with a relatively thin trade deal with Europe.’

Michael said: "Part of the reason that tomorrow the Chancellor must raise taxes and cut public spending is because of the damage to the UK public finances that have been caused by the loss of output due to Brexit."

Post-pandemic problems like the cost of living crisis, rising energy bills and inflation have further added to growing regret for Brexit – although these have been seen across Europe, too.

Michael told Tom that UK's economy would be in "better shape" had Brexit not happened.

Tom asked Michael what he would "prescribe" a PM and chancellor to do in order to solve the UK's financial crisis.

Michael replied: "The easiest and the best thing would be to have a trade deal with Europe which reduces trade barriers compared to what we have now."

The Governor of BoE Andrew Bailey and other senior BoE figures also commented on the impact of Brexit today.

Mr Bailey said he has to be "neutral on Brexit" but will not be "neutral on the effect" of it, declaring a "long-run downshift in productivity".

Later he added: "We went on a relatively hard fall with Brexit with a thin trade deal with Europe."

Concluding: "The government chose to put itself too far away it was a choice.

"There were other trade deals that would have given us closer ties with Europe.

"The government chose not to pursue them."

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