A study carried out by think tank the National Institute of Economic and Social Research (NIESR) has suggested that the Brexit referendum has ‘cost UK households over £600 per year’.
The NIESR stated that the Brexit vote caused sterling to depreciate, resulting in sluggish economic growth. The vote also contributed to a fall in living standards.
The think tank has now downgraded its growth predictions for the UK economy for this year and for 2018: the NIESR anticipates the economy to grow by 1.5% both this year and next year. These predictions are based on the prospect of the UK experiencing a ‘soft Brexit’, and do not take into account the effects of a ‘hard Brexit’.
The NIESR’s new predictions come in the wake of a ‘strengthening and broadening’ global economic recovery.
Garry Young, Director of Macroeconomic Modelling and Forecasting at the NIESR, commented: ‘It is almost certain that the relative deterioration in the UK economy and the accompanying fall in living standards over the past year are a consequence of the vote by the British people to leave the EU.
‘Had sterling not depreciated and the economy continued to grow at its previous rate, as would have been likely with an improving global backdrop, real household disposable income per head might have been more than 2% higher than now, worth over £600 per annum to the average household.’
Mr Young also called for Chancellor Philip Hammond to ‘make full use of the fiscal space available within the existing rules to accommodate any continued weakness in productivity’ in the upcoming Autumn Budget. He added that the government has ‘scope to relax fiscal austerity, whilst maintaining a long-term fiscal discipline’.