According to S&P Global Ratings, the United Kingdom has lost approximately £6.6 billion in economic activity per quarter since it voted to leave the European Union. S&P is the latest firm that estimated the damage that is caused by Brexit.
In a report that was published today, Boris Glass, the senior economist of the ratings agency, said that the fifth-biggest economy in the world would have been approximately 3 percent larger by the end of last year if the country had not voted to leave the European Union in the June 2016 Brexit referendum.
He stated that the quarterly growth rates would have averaged around 0.7 percent, instead of 0.43 percent.
Glass added: “Immediately after the referendum, the pound fell by about 18 percent. This was the single most pertinent indicator of the impact of the vote and the drag it created, via inflation, has been spreading through the economy.”
As imports became more and more expensive, inflation began to increase, curbing household spending. S&P estimated that the inflation was 1.8 percent higher as compared to what it would otherwise have been by the third quarter of 2017.
The estimate is slightly lower as compared to an assessment by Goldman Sachs that was released earlier this week. Goldman Sachs pegged the cost to the economy at approximately 600 million pounds per week. According to the calculations of Reuters, that is equivalent to 7.8 billion pounds per quarter.
The report that was released by S&P was based on the Doppelganger approach, an econometric technique that utilised a synthetic UK economy that is based on the performance of other economies in order to estimate how the United Kingdom would have performed if it did not decide to withdraw from the European Union.
The other countries included Japan, Canada, Denmark, Ireland, Hungary, Portugal and the United States of America.