“The UK economy as a whole has been permanently damaged by Brexit,” Michael Saunders, who was an external member of the central bank’s monetary policy committee, told Bloomberg TV in an interview. “It has significantly reduced the potential output of the economy, eroded business investment,” he said, adding: “If we hadn’t had Brexit, we probably wouldn’t be talking about an austerity budget this week.” “The need for tax increases, spending cuts would not exist if Brexit had not reduced the potential output of the economy so much.” Sanders joined the rate-setting committee shortly after the 2016 Brexit referendum result and left the role in August this year. He said the “main legacy of that period” was weak economic output. The prime minister, Rishi Sunak, and the chancellor, Jeremy Hunt, have both warned that the autumn statement is likely to include spending cuts and tax rises. Hunt, who is due to address parliament on Thursday, said last week there would be a “tough road ahead”. Sanders’ remarks came as calculations, compiled into a Bloomberg index, showed the US dollar value of London-listed stocks had been overtaken by Paris. This means London has lost its crown as the biggest hub for IPOs in Europe. Asked about this turn of events, Sanders said it was just one example of the wider damage caused by Brexit. The depreciation of the pound both after the Brexit referendum and in the wake of Liz Truss’s mini-budget was a likely factor behind the change in fortunes. Long-term concerns about consumer resilience in the face of the cost of living crisis have also reduced market valuations for mid-sized listed companies with a large share of their UK operations. Subscribe to Business Today Get ready for the business day – we’ll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. Some of the intentions behind Truss’ failed mini-budget were sound, Sanders said. The ambition to try to raise the potential of the UK economy, the ceiling below which it can generate non-inflationary growth, was well-founded. “Liz Truss, in her brief failed premiership, got this point right.” However, the methods of tax cuts and pressure for deregulation chosen by Truss and her chancellor, Kwasi Kwarteng, were less wise. “I would put more emphasis on improving trade links with the EU,” he said, alongside investing in education and tackling long-term illness among working-age people. His comments echoed those of investors who said the UK could improve its overall productivity – disinflationary growth – if it renegotiated its trade links with the continent. Other proposals to increase production included increasing the number of skilled and unskilled workers by allowing more immigration to the UK.
