- S&P says the world’s fifth-biggest economy would have been about 3 percent larger by the end of 2018 if the country had not voted in a June 2016 referendum to leave the EU
- ‘Immediately after the referendum, the pound fell by about 18 percent — this was the single most pertinent indicator of the impact of the vote’
LONDON: The United Kingdom has lost £6.6 billion ($8.7 billion) in economic activity every quarter since it voted to leave the European Union, according to S&P Global Ratings, the latest company to estimate the damage from Brexit.
In a report published on Thursday, the ratings agency’s senior economist, Boris Glass, said the world’s fifth-biggest economy would have been about 3 percent larger by the end of 2018 if the country had not voted in a June 2016 referendum to leave the EU.
Quarterly growth rates would have averaged about 0.7 percent, rather than 0.43 percent, he said.
“Immediately after the referendum, the pound fell by about 18 percent. This was the single most pertinent indicator of the impact of the vote and the drag it created, via inflation, has been spreading through the economy,” he said.
As imports became more expensive, inflation started to rise, curbing household spending. S&P estimated inflation was 1.8 percent higher than it would otherwise have been by the third quarter 2017.
The estimate is slightly lower than an assessment by Goldman Sachs earlier this week, which pegged the cost to the economy at about £600 million per week. That equates to £7.8 billion a quarter, according to Reuters calculations.
The S&P report was based on the Doppelganger approach, an econometric technique that used a synthetic UK economy based on the performance of other economies to estimate how the UK would have performed had it not decided to leave the EU.
The other countries included the United States, Canada, Japan, Ireland, Denmark, Portugal and Hungary.