UK | Covid plus Brexit put the brakes on long-term growth
The combined impact of Brexit and the coronavirus pandemic means we now expect UK growth to average just 1.2% a year in the 2020s. The damage from Brexit is likely to prove slightly more than the scarring from the pandemic.
What you will learn:
We expect Brexit to exert a slightly larger drag than the pandemic over the longer-term.
The pandemic will leave a legacy of lower investment, weaker population growth, and slightly higher unemployment. Our latest long-term GDP forecast is 2.6ppts lower than pre-pandemic, which already included a 3ppt hit from Brexit.
A major uncertainty – compounded by a lack of reliable data – is the pandemic’s impact on population growth. If more than 1 million people have left the UK permanently, this could lower long-run GDP by a further 2ppts.