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  • By The Financial District

Brexit Ruined UK's Economic Foundations, CNN Analysis Shows

It’s been two years since former Prime Minister Boris Johnson signed his Brexit trade deal and triumphantly declared that Britain would be “prosperous, dynamic and contented” after completing its exit from the European Union (EU), Hanna Zlady stressed in an analysis for CNN.

Photo Insert: It is estimated that, over the 18 months to June 2022, UK goods trade is 7% lower than it would have been had Britain remained in the EU.

The Brexit deal would enable UK companies to “do even more business” with EU, according to Johnson, and would leave Britain free to strike trade deals around the world while continuing to export seamlessly to the EU market of 450 million consumers.

In reality, Brexit has hobbled the UK economy, which remains the only member of the G7 — the group of advanced economies that also includes Canada, France, Germany, Italy, Japan, and the United States — with an economy smaller than it was before the pandemic.

Britain won’t easily replace what it has lost by forfeiting unfettered access to EU, the world’s largest trading bloc. The only substantive new trade deals it has struck since exiting the European Union, which did not simply roll over the deals it had as an EU member, have been with Australia and New Zealand.

By the government’s own estimate, these will have a negligible impact on the UK economy, increasing GDP in the long run by just 0.1% and 0.03% respectively.

All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

Research by the Centre for European Reform, a think tank, estimates that over the 18 months to June 2022, UK goods trade is 7% lower than it would have been had Britain remained in the EU.

Investment is 11% weaker and GDP is 5.5% smaller than it would have been, costing the economy £40 billion ($48.4 billion) in tax revenues annually. That’s enough to pay for three quarters of the spending cuts and tax rises that UK finance minister Jeremy Hunt announced in November, Julia Horowitz also reported for CNN.

Government & politics: Politicians, government officials and delegates standing in front of their country flags in a political event in the financial district.

By contrast, the UK Office for Budget Responsibility (OBR), which produces economic forecasts for the government, expects Brexit to reduce Britain’s output by 4% over 15 years compared to remaining in the bloc.

Exports and imports are projected to be around 15% lower in the long run. Initial data has borne this out.

Market & economy: Market economist in suit and tie reading reports and analysing charts in the office located in the financial district.

According to the OBR, in the fourth quarter of 2021, UK goods export volumes to the European Union were 9% below 2019 levels, with imports from the European Union 18% lower. Goods exports to non-EU countries were 18% weaker than in 2019.

“The United Kingdom “appears to have become a less trade-intensive economy, with trade as a share of GDP falling 12% since 2019, two and a half times more than in any other G7 country,” the OBR said in the March report.

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