Brexit economic impact: British households are £1,500 worse off than before referendum

Households are �,1500 worse off than was expected before Brexit Picture: Matt Cardy/Getty Images
Households are �,1500 worse off than was expected before Brexit Picture: Matt Cardy/Getty Images
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Households in the UK have taken a £1,500 hit since the Brexit referendum due to higher than expected inflation and stalling economic growth.

The average income of homes across the country is £1,500 lower than it had been predicted to be prior to the vote in 2016, in which the UK opted to exit the European Union.

A new report said that the UK had experienced the sharpest slowdown in income growth of any comparable economy and higher than expected inflation levels – meaning Brits were spending much less than was forecaster.

Contrast with the rest of the world

The study, published by the Resolution Foundation said that households had £1,500 less disposable income on average than they would have had under the Office for Budget Responsibility (OBR) pre-referendum forecast.

It said that the economic “underperformance” that had been witnessed since 2016 is a “largely UK-specific issue” and that the global performance had actually exceeded expectations.

James Smith, research director at the Resolution Foundation, said: “Two and a half years since the UK voted to leave the European Union, the country’s post-Brexit position remains far from clear.

• READ MORE: Leave-backing expats in Spain regret their decision as Brexit looms

“There has been much discussion about the impact of this uncertainty on businesses, but not enough about its effect on household incomes.

“The UK’s stark under-performance on income growth since 2016 – which has tailed off more than other advanced economies – has left UK households taking a £1,500 hit to their living standards.

Economic growth has fallen

“As we approach Brexit day on 29 March, politicians in all parties need to recognise how much is at stake for family living standards and that how the country goes forward, not just where it is heading, matters for household incomes in the here and now.”

The report corresponded with another announcement from the the Institute for Fiscal Studies which concluded that a no-deal Brexit would leave the UK budget deficit £50billion higher over 15 years than if Britain had stayed in the EU.

It said the UK would require an additional two years of the post 2010-style strict austerity measures to plug the gap.

Official figures have also shown that, in the final quarter of 2018, the UK’s economic growth slowed as car manufacturing declined.

Gross domestic product growth fell to 0.2 per cent between October and December, according to the Office for National Statistics, compared with 0.6 per cent growth in the previous quarter.

Meanwhile, annual GDP increased by 1.4 per cent, the weakest it has been since 2009.