Impact of Brexit on the economy – worse than the pandemic
The chairman of the Office for Budget Responsibility said that the impact of Brexit on the UK economy will be more harmful in the long term perspective compared to the current pandemic.
In the long term perspective, Richard Hughes said that leaving the EU would decrease the UK’s potential GDP by around 4%.
He said forecasts showed the pandemic could reduce GDP by around 2%.
He told the BBC that, in this case, Brexit seems to have a more impact on the economy in the long term perspective than the pandemic. His comments appeared after the OBR said that inflation could hit around 5% while the cost of living could grow for 30 years.
According to Mr. Hughes, the recent data showed the impact actual impact of Brexit. The Treasury has been contacted for further comments.
What are GDP and its measurement?
Gross Domestic Product (GDP) is one of the important ways to show how well or badly an economy is performing. It measures all the activity of governments, companies, and individuals in an economy.
In a developing economy, quarterly GDP will be slightly higher than before, which means that people are working more and getting a little bit richer. If GDP falls, the economy starts shrinking. In 2016, the UK voted to leave the EU and officially left the trading bloc in January 2020. However, both sides agreed to maintain many things until the end of 2020. It remained unchanged until the announcement of a new trade deal, implemented in January this year.
Supply chain problems
Brexit and the current pandemic played a part in existing supply chain issues in the UK. These problems exposed the deficiency of lorry drivers, resulting in recent shortages of products for businesses and some empty stores for consumers. Supply chain issues led to the government giving short-term visas to EU workers across specific sectors.
Due to a shortage of seasonal overseas workers, the British Poultry Council warned that turkey shortages are possible while turkey farmers try to ensure Christmas will be as expected. The government promised customers that turkeys would be available for Christmas and extended temporary visas to sustain worker numbers.