(Bloomberg) -- The damage to the U.K. economy caused by the vote to leave the European Union two years ago already exceeds the size of the budget contributions Britain will be able to claw back when it finally leaves the bloc, according to an economic study by the Centre for European Reform.
Uncertainty caused by Brexit has already caused a 2.1 percent dip in economic output, even before Britain’s departure next March, the CER said late Friday in an emailed statement. That’s cost the public finances 23 billion pounds ($30 billion) in lost tax revenue, the think tank said.
The economic damage means the Treasury has less money to spend on public services, and knocks on the head the idea that Britain will enjoy a “Brexit dividend” when it no longer has to contribute to the European budget, it said.
“Two years on from the referendum, we now know that the Brexit vote has seriously damaged the economy,” said CER Deputy Director John Springford, who authored the study. “We know that the government’s Brexit dividend is a myth: the vote is costing the Treasury 440 million pounds a week, far more than the U.K. ever contributed to the EU budget.”
Foreign Secretary Boris Johnson, who spearheaded the Brexit campaign in 2016, toured the country at the time in a red bus promising to use the budget contributions of 350 million pounds a week to instead fund the National Health Service.
In reality, Britain pays only half that amount, since it gets back around 9 billion pounds from the EU, though that didn’t stop Prime Minister Theresa May touting a “Brexit dividend’’ this week when she announced a 20.5 billion-pound boost for health care.
The CER used a statistical model that compared the U.K.’s economic performance against predicted output if the referendum result had gone the other way. It did so by identifying which OECD countries’ gross domestic product, consumption and investment data best replicated the U.K. economy in the two decades leading up to the referendum.
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