The cost of Brexit for the UK will soar to $260 billion this year, a new study shows
- The UK's December brought new certainty around the nation's Brexit plans, but the UK-EU split will only grow more expensive in 2020, according to new research from Bloomberg Economics.
- Brexit has already cost the UK roughly 130 billion pounds ($170 billion), UK economist Dan Hanson wrote. Prime Minister Boris Johnson's expedited exit from the EU will add another 70 billion pounds ($91 billion) to the total in 2020.
- The 2020 estimate is the highest yearly cost estimate from Bloomberg Economics since the June 2016 referendum.
- A small boost to UK growth in 2020 will lift the nation in the short-term, Hanson wrote, but lasting trade woes and lost efficiencies will plague economic recovery for years to come.
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The UK's December election brought new certainty around Brexit's completion, but the event will grow most expensive in 2020, according to new research from Bloomberg Economics.
The study by UK economist Dan Hanson found Brexit has already cost the nation roughly 130 billion pounds ($170 billion), and estimates Prime Minister Boris Johnson's expedited exit from the EU will add another 70 billion pounds ($91 billion) by the end of 2020.
Bloomberg Economics' yearly cost estimate for 2020 is the highest since Brexit's June 2016 referendum, as the economic toll to the UK has accelerated each year since the historic vote. The nation's economy outperformed analyst estimates in the months following the vote as consumer spending remained strong, Hanson wrote. By 2017, growth began to lag as an inflated pound and slowing income growth bit into spending activity.
As the initial deadline of March 29, 2019, grew closer, increased uncertainty around the deal's specifics and future trade deals further dragged on the economy. In the years since Brexit's approval, the UK's growth has halved to 1% from 2%, according to the study.
The nation's growth has also underperformed the greater trend among G7 nations since the referendum, and the British economy is now roughly 3% smaller than it would've been had the referendum not occurred, Hanson wrote.
Brexit's deadline has since been pushed back to January 31, 2020, and while Johnson's December deal with the EU removed the possibility of a no-deal separation, many trade agreements are yet to be finalized. Lasting trade uncertainties create "another potential cliff edge" for the British economy near the end of 2020, Hanson said.
The nation's economic outlook isn't set to improve beyond 2020 either. A small boost to UK growth in 2020 will lift the nation in the short-term, the report said, but lasting trade hurdles and lost efficiencies will plague economic recovery for years to come.
"As the U.K. comes to terms with its new trading relationship with the EU and grapples with the productivity challenge that has hindered growth since the financial crisis, the annual cost of Brexit is likely to keep increasing," Hanson wrote.
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