Treasury figures from Budget confirm there was no £350m a week Brexit dividend

Brexit has in fact cost every person in the UK £1,200 so far, spending watchdog says – as economy flat-lines

Jon Stone
Policy Correspondent
Wednesday 11 March 2020 18:26 GMT
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Budget 2020 in numbers

The Treasury has confirmed that it will not be getting an extra £350 million a week after Britain stops paying into the EU budget, despite false claims by Brexiteers during the referendum.

Britain is in fact expected to be overall poorer by £1,200 per person because of Brexit's economic drag, according to the government's spending watchdog.

The chancellor's red budget book shows the gross EU contributions saved by the UK will be around £42 billion over the next five years, rather than the £91 billion claimed under the false figure publicised by Boris Johnson in 2016.

But the money is not expected to benefit the public finances as the majority needs to be spent on British domestic replacements for EU programmes.

It comes as the government's own Office for Budget Responsibility (OBR) puts the cost to the British economy of Brexit so far at around 2 per cent of GDP, or about £40 billion.

"We estimate that the economic effects of the referendum vote have so far reduced potential output by around 2 per cent, relative to what would have happened in its absence," the OBR said in its analysis released alongside the budget.

"Part of this reflects lower net inward migration, but mostly it reflects weaker productivity growth on the back of depressed business investment and the diversion of resources from production towards preparing for potential Brexit outcomes."

The body continued: "Real business investment has barely grown since the referendum, whereas our March 2016 forecast assumed it would have risen more than 20 per cent by now. We expect this shortfall to be partly reversed as the specifics of the trading relationship are clarified, hence reducing uncertainty.

"But, working in the other direction, we expect the adverse effect of higher trade barriers to build through our five-year forecast period and beyond."

Figures released by the Office for National Statistics this morning show that the economy has flat-lined, even before the effects of coronavirus bite.

Britain is expected to enter a recession over the coming months, in part thanks to the effects of the virus – meaning it will be difficult to disentangle the effect of Brexit.

"The twin challenges of Brexit and coronavirus are a double whammy that will restrict our economy in both the short and medium-term," said Naomi Smith, CEO of pro-EU campaign Best for Britain.

"Our economy is resilient enough to handle one of these shocks, but it cannot cope with two simultaneously. And frankly, it doesn't need to."

She called on the chancellor to reconsider whether the government should "stick so rigidly to its arbitrary deadline for European talks in light of the unprecedented health crisis our country currently faces".

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