Goldman Sachs on Monday estimated Britain's economy has lost nearly 2.5 per cent of GDP relative to its growth path prior to the mid-2016 referendum on exiting the European Union, and has lagged other advanced economies as uncertainty dents investment.
“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.
Their model finds the Brexit cost stood at around 600 million pounds ($785 million) per week since the referendum. In a no-deal Brexit, a scenario Goldman sees a 15 per cent chance of, Britain would see large output losses with a ”substantial” global confidence shock marked by sharp sterling depreciation.
European countries would be most exposed to this scenario, the economists estimated, and could see output losses of around 1 per cent of real GDP. ($1 = 0.7641 pounds)