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Brexit has wiped out 29 bn in business Investments.

 Jonathan Haskel, an external mem­ber of the Bank’s Mon­et­ary Policy Com­mit­tee, said the lack of

Brexit

busi­ness invest­ment growth since the 2016 ref­er­en­dum was equi­val­ent to 1.3 per cent of gross domestic product, or about £1,000 per house­hold. Busi­ness invest­ment is cru­cial to pro­ductiv­ity development because it can boost the value of work­ers’ out­put, which in turn enables wages to rise. He added that part of the recent pro­ductiv­ity slow­down «really goes back to Brexit», with the UK in last place among G7 mem­bers for invest­ment growth since 2016. However, the Office for National Stat­ist­ics previous week revised up the actual value of busi­ness invest­ment over the past year com­pared with earlier estim­ates, not­ing growth of 4.8 per cent between the third and the fourth quarter of 2022.

As a res­ult, busi­ness invest­ment is now back to pre-coronavirus pan­demic levels and the level reached at the time of the Brexit ref­er­en­dum. But it remains well below the level it would have reached had invest­ment con­tin­ued to rise at the pre-ref­er­en­dum rate. This is in con­trast with other coun­tries, such as the US, where busi­ness invest­ment rose by 24 per cent in the six years to Q4 2022, accord­ing to sep­ar­ate offi­cial data. The estim­ate for the busi­ness invest­ment gap adds to evid­ence of the so-called Brexit effect on the eco­nomy.

« The gov­ern­ment is mak­ing the most of our Brexit freedoms to grow the eco­nomy, includ­ing ambi­tious fin­an­cial ser­vices sec­tor reforms which will unlock over £100bn of invest­ment, and we are review­ing EUde­rived rules in other crit­ical growth sec­tors this year».

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