Brexit chaos costs UK economy £600m a week: Goldman Sachs
Britain's chaotic exit from the European Union has cost its economy about £600m (€702m) a week since the 2016 referendum, Goldman Sachs said yesterday in a report that underscores how Brexit uncertainty has dented investment.
Separate data yesterday showed factories in the UK stockpiled for Brexit at an explosive rate last month, unlike anything seen before in a major rich economy.
This pushed manufacturing growth to an unexpected 13-month high, a survey showed yesterday.
The IHS Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) rose to 55.1 from 52.1 in February, confounding all forecasts in a Reuters poll that had pointed to a reading of 51.0.
The headline figure far exceeded readings from the eurozone, where a global slowdown has left factories in a slump.
But British manufacturers are increasingly worried that their surge of activity, fuelled by preparations to exit the EU, will make way for a sharp decline later, survey compiler IHS Markit said.
Helena Sans, head of manufacturing at Barclays, said: "The true picture of UK manufacturing continues to be obscured by stockpiling, driven by the ongoing Brexit uncertainty, and this pattern looks unlikely to change until manufacturers see some whiff of white smoke above Westminster."
Goldman Sachs found that Brexit had cost the UK, the world's fifth largest economy, nearly 2.5 pc of GDP at the end of last year, compared to what growth might have been without the 2016 vote.
"Politicians in the UK are still struggling to deliver on that vote," Goldman Sachs economists wrote in a note to clients. "The resulting uncertainty over the future political and economic relationship with the EU has had real costs for the UK economy, which have spilled over to other economies." The US bank said Brexit uncertainty has been a major driver of economic output losses as they are concentrated in investment.
"Uncertainty shocks weighed on investment growth in the immediate aftermath of the Brexit vote, as well as more recently amid the renewed intensification of Brexit uncertainty," the economists said. In a no-deal Brexit, a scenario Goldman sees a 15pc chance that UK GDP would fall by 5.5pc and a "substantial" global confidence shock would see sterling depreciate by 17pc.
European countries would be most exposed to this scenario, the economists estimated, and could see output losses of around 1pc of real GDP.