The results of a new analysis published by Goldman Sachs showed that Brexit had a negative impact on Britain's growth rate, and now the economy is “significantly underperformed” by other advanced economies. According to Goldman Sachs estimates, over the past eight years, the UK economy has grown 5% less than other comparable countries. Meanwhile, experts have warned that the real impact on the British economy could be between 4% and 8% of real GDP, given the reduction in trade, weaker business investment, and labor shortages as a result of lower immigration from the EU.
"Since the referendum (June 23, 2016) to today, the U.K. goods trade performance has lagged other advanced economies by around 15%, while business investment has fallen well below pre-referendum levels. Meanwhile, immigration from the EU has declined only to be replaced by a less economically active cohort of migrants from non-EU countries, primarily students. Overall, the data point to the significant long-term costs of the UK's exit from the EU," Goldman Sachs said, adding that the reduction in trade was in line with expectations, and the underperformance in investment was “more pronounced” that anticipated.
Goldman Sachs warned that although new trade agreements with non-EU countries could potentially mitigate the costs of Brexit, estimates show that the benefits are likely to be small. Meanwhile, the timing of new potential trade agreements with major partners such as the United States and India has not yet been announced.