Jonathan Haskell, an external member of the Bank of England's Monetary Policy Committee (MPC), said that Brexit has caused a decline in business investment which is costing an average UK household around £1,000 and stopped investment in its tracks by the decision to leave the EU.
He revealed that the Bank had calculated that the hit to business investment has led to a drop in productivity worth about 1.3 per cent of GDP – around £29bn.
The expert said Britain was an “extreme outlier” when it comes to the productivity slowdown, adding: “We suffered much more. A bit of that is that we have this larger financial sector. But I think it really goes back to Brexit.”
Haskell said: “We had a big boom [investment] between 2012 to 2016, but then investment just plateaued from 2016, and we dropped to the bottom of G7 countries.”
On the productivity penalty from Brexit, he said: “That 1.3 per cent of GDP is about £29bn, or roughly £1,000 per household.” Haskel also warned that high levels of inactivity in the labour market is a distinctly British problem amid the grim economic outlook.
On inflation
Haskel said the BoE should be "really, really careful" about the risk of high inflation becoming embedded and he would watch data closely in the coming months given the high levels of uncertainty. "What I would prefer to do is make policy with much more attention on the data flow over the next few months," Haskel said
Meanwhile, former chief Brexit negotiator Lord Frost has urged Rishi Sunak’s government to “fully and enthusiastically embrace the advantages of Brexit” as he warned of a secret establishment plot to undermine the agreement.