What impact is Brexit having on the UK economy? - BBC News

Summary

Upon taking office, Rishi Sunak faces the challenge of fulfilling the Conservative's 2019 election manifesto promise to build an economy embracing Brexit's opportunities. Despite claims that Brexit is damaging the economy, Sunak, a long-time Brexit supporter, acknowledges trade impacts but emphasizes sovereignty and control. The Office for Budget Responsibility forecasts a 4% reduction in UK GDP over 15 years due to Brexit, with trade intensity notably decreased. However, new trade agreements and the potential for economic growth remain on the table, as Sunak seeks to overcome economic challenges and deliver on the promise of Brexit's economic opportunities.

Takeaways

• 🌟 Rishi Sunak, upon taking office, pledged to fulfill the Conservative's 2019 election manifesto promises, focusing on building an economy that leverages the opportunities of Brexit.
• 💭 Critics argue that Brexit is not contributing positively to the economy and, in fact, is causing significant damage, contrary to the promises made by its proponents.
• 📉 In 2020, the UK under Prime Minister Boris Johnson, agreed on a trade deal with the EU that involved leaving the single market and the customs union, which has negatively impacted trade with the EU.
• 🔄 The Office for Budget Responsibility (OBR) reported a 15% reduction in trade intensity as a direct consequence of Brexit, with UK exports not recovering after the COVID-19 pandemic unlike other advanced economies.
• 🇪🇺 Despite Brexit, the UK has secured 71 new trade agreements with other countries, largely based on existing EU deals, and has established completely new agreements with Japan, New Zealand, and Australia.
• 📈 The trade deal with Australia is estimated to increase the UK's GDP by 0.08% by 2035, but there is no significant trade deal with the US yet, and business investment levels have not returned to the peak seen in 2016.
• 💰 The value of the pound has significantly fallen against the US dollar since 2016, making imported goods more expensive and contributing to inflation.
• 📊 The OBR forecasts that Brexit will reduce the UK's GDP by 4% over 15 years, and the economic impacts of COVID and the war in Ukraine are also considerable factors affecting the economy.
• 🌐 Global economic pressures and energy price inflation are affecting both developed and developing economies worldwide, adding to the complexity of the UK's economic situation.
• 🔄 Lord Frost, who negotiated Brexit for the UK, acknowledges the costs of leaving the customs union and single market but emphasizes that patience is required as the political system adjusts to the significant change.

Q & A

When did Rishi Sunak take office?

Rishi Sunak took office on Tuesday, as mentioned in the transcript.

What was a key promise in the Conservative election manifesto of 2019?

A key promise in the Conservative election manifesto of 2019 was to build an economy that embraces the opportunities of Brexit.

What is the general opinion of those who believe Brexit is not helping the UK economy?

Those who believe Brexit is not helping the UK economy consider it a total disaster and argue that it is doing real damage to the economy.

What was the outcome of the trade deal agreed by then Prime Minister Boris Johnson with the EU in 2020?

The trade deal resulted in the UK leaving the single market and the Customs Union. It was seen as a deal that would allow UK companies and exporters to do more business with European partners.

According to the Office for Budget Responsibility (OBR), what has been the impact of Brexit on UK trade intensity?

The OBR concluded there has been a 15% reduction in trade intensity as a result of Brexit.

How has the UK's trade with the European Union been affected since Brexit?

The UK has lost a large fraction of its trade with the European Union, including high-value professional services trade, making the country poorer.

What is the current status of the UK's trade agreements with other countries since Brexit?

There are already 71 new agreements with other countries, though most of them are direct copies of deals done when the UK was part of the EU. There are completely new deals with Japan, New Zealand, and Australia.

How is the Australia trade deal expected to impact the UK's GDP?

The Australia trade deal is estimated to increase the UK's GDP by 0.08% by 2035.

What has been the trend of business investment in the UK since the Brexit referendum?

Business investment peaked in 2016, the year of the Brexit referendum, and has not returned to that level since.

How has the value of the pound been affected since the Brexit referendum?

The value of the pound has fallen considerably against the dollar since the Brexit referendum, making imported goods more expensive and contributing to inflation.

What is the OBR's forecast for the long-term impact of Brexit on UK GDP?

The OBR forecasts that Brexit will reduce the UK GDP by 4% over 15 years.

What does Lord Frost suggest is required for the UK to realize the opportunities of Brexit?

Lord Frost suggests that patience is required as the whole British political system is going through a convulsion after Brexit, and the impact of such a huge change has some way to play out yet.