1 Dec 2016 01:00pm

Brexit could cost £12bn a year to UK economy, OBR chair says

The chair of the Office for Budget Responsibility (OBR) has warned MPs that Brexit could cost the UK economy £12bn a year
Caption: OBR chair warns committee he "could be retired before we know where we are"

Giving evidence to the Treasury Committee, Robert Chote confirmed the OBR’s view that Brexit will cost Britain around £12bn a year, or about 0.5% of its annual GDP.

Responding to questions from MPs regarding uncertainty during the negotiations period, Chote said, “My suspicion is that, if we are in a negotiation in which pretty much nothing is agreed until everything is agreed, I could be retired before we know where we are.”

According to OBR forecasts unveiled during the Autumn Statement, the UK will have to borrow an extra £122bn by 2022, leading to a £58.7bn black hole.

OBR predictions also put growth over the forecasted period 2.4 percentage points lower than it would have been had the UK not voted to leave the EU.

Chote said during the meeting that Philip Hammond’s £27bn infrastructure spending plans will have little effect on the UK’s economy.

He told MPs, “This is not the near-term stimulus package some people were hoping for. It’s relatively small.” He added that the stimulus would be of 0.1% “at most”.

Reacting to the OBR forecasts, the Institute for Fiscal Studies (IFS) warned that UK workers face the biggest squeeze on their wages in 70 years. It also said that UK workers will be earning less in real wages in 2021 than they did in 2008.

On Thursday, David Davis suggested that the government could consider making contributions to the EU budget in exchange for access to the single market

The Brexit secretary said he would “consider making any contribution in any shape or form for access to the single market”.

Following his remarks, the pound rose 1% against the dollar, its highest level in three weeks.

Jessica Fino

Related articles

Philip Hammond abolishes the Autumn Statement

IFS warns of biggest squeeze on pay in 70 years due to Brexit

UK households £1.2trn worse off post Brexit

Hard Brexit "could cost UK £10bn in taxes and 75,000 jobs"