Sunday, November 28

British economy: Brexit consequences worse than pandemic

Status: 10/28/2021 11:24 a.m.

According to a British authority, Brexit will have significantly worse consequences for the country’s economy than the corona pandemic. Inflation and the cost of living could rise dramatically.

According to the Office for Budget Responsibility (OBR), the effects of Brexit on the British economy are more serious than the consequences of the measures taken to combat the pandemic. The exit from the EU will reduce the UK’s gross domestic product (GDP) by around four percent in the long term, OBR boss Richard Hughes told the BBC. The pandemic would lower GDP by another two percent, Hughes said. As a result, according to the OBR data, Brexit will have a significantly more negative impact on the British economy than Corona.

In its latest report, the independent advisory body had stressed that supply bottlenecks due to stricter immigration rules as well as more tariffs and bureaucracy had exacerbated the situation in the UK since Brexit.

Auto industry in the valley

Currently in the UK, the specific economic problems associated with Brexit are clashing with the crises caused by the pandemic. In the past few weeks, the lack of truck drivers meant that many filling stations could not be supplied with fuel. Supermarket shelves also remained partially empty.

Because many drivers from the EU returned to their home countries during the pandemic and cannot easily live and work in Great Britain again after Brexit. In addition, drivers simply dropped out because they had to be quarantined.

The industry is also struggling: the British auto industry produced fewer vehicles in September than it has produced this month for almost 40 years.

“Government Spending Epidemic”

The British government presented the new budget for the coming year yesterday. Finance Minister Rishi Sunak announced billions in aid for numerous industries as well as tax increases. According to Sunak, the British economy will reach the pre-Corona level in 2022.

He expects growth of 6.5 percent this year and 6.0 percent next year. The OBR is also currently expecting growth of 6.5 percent, previously the OBR estimate had been four percent.

The Times called Sunak’s tax hikes “immense”. The tabloid “Sun” criticized an “epidemic of government spending”.

The OBR also warned that the cost of living could rise faster than it has been in 30 years and that inflation could soar to five percent due to soaring energy prices. A current government forecast states that inflation will climb to an average of four percent in 2022. Last September it was 3.1 percent in the UK.

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