Brexit Day is finally here, after more will-they-won’t-they than Ross and Rachel.
Whether you will be saying a sad ‘au revoir’ to the European Union over a dinner of Spanish paella, Italian gelato and a bottle of French plonk, or celebrating with Nigel Farage and his band of merry Brexiteers in Parliament Square, when 11pm comes, we’re out.
But how much has it cost us to get to this point, beyond the millions of newspaper columns and even more heated forums (not to mention all the awkward family dinners)?
Good question. Shame there isn’t a simple answer.
Since before the results of the 2016 referendum were even announced, analysts have been desperately trying to tot up the cost of leaving the EU.
Unsurprisingly, there are a lot of different figures out there. But as the UK prepares itself for the divorce of the century, this is what experts have to say about how much Brexit has cost us, and the costs it could still bring.
‘The cost of preparing: £6.3bn’
Among those who have tried to tot up the Brexit bill is the Institute for Government (IfG). According to the think-tank, the UK government has committed to spend £6.3bn on Brexit preparations up to April 2020.
The IfG reckons that’s the equivalent of buying two brand new Queen Elizabeth-class aircraft carriers, or the money being spent on extending the Thameslink railway in the south-east of England.
But how does all that cash break down?
According to the institute’s calculations, Theresa May’s government pledged £4.2bn to Brexit prep during her time in Number 10.
Of this:
- £935m was given to the Home Office
- £787m was handed to the Department of Environment, Food and Rural Affairs (Defra)
- £682m was given to HM Revenue and Customs
Meanwhile, the IfG has reported that the £2.1bn pledged by Johnson’s government was used for no-deal Brexit preparations, with:
- £344m put towards readying the border
- £434m used to ensure the transport of medicine
- £138m set aside for a public information campaign
Of the £2.1 bn, £1bn was also reportedly put into a central pot for government departments to use if they needed extra cash to deal with no-deal Brexit prep.
But what about the future? According to the institute, chancellor Sajid Javid has already committed an extra £2bn for Brexit preparations in 2020/21, with an increase in funds for Defra and HMRC.
‘The cost to the economy so far: £130bn’
While the IfG has tried to work out how much the government has spent readying the UK for Brexit, Bloomberg Economics has looked at another question – how much has the decision to leave the EU cost the economy?
According to the outlet’s economists, it’s a lot – around £130bn. And they reckon that figure is going to hit £200bn by the end of the year.
But how did they get to this number?
Bloomberg reckons that over the past three years, the UK has started to distance itself from G7 countries, namely – France, Germany, Italy, Japan, Canada and the US.
Economists believe that, as a result of this, the British economy is still 3% smaller than it would have been if the UK had voted to remain in the EU in 2016 – even with the slow down of the global rate of growth taken into account.
Meanwhile, business investments have been held back by Brexit uncertainty, they said, with the annual rate of economic growth halving to 1%.
In the report, which was published in January, Bloomberg economist Dan Hanson predicted a “shot in the arm” for the economy in 2020 – but said it won’t last.
“As the UK comes to terms with its new trading relationship with the EU and grapples with the productivity challenge that has hindered growth since the financial crisis, the annual cost of Brexit is likely to keep increasing,” he said.
‘The cost still to come: £70bn’
Much like Bloomberg Economics, the National Institute of Economic and Social Research (NIESR) – an economic think tank – has been trying to work out what Brexit will do to the UK economy.
It concluded that GDP (a measure of the health and/or size of the economy) will be 3.5% lower by 2029 than it would have been if the UK had decided to stay in the EU.
OK, enough of the economics jargon – what does that actually mean?
Well, according to the institute, it means the UK will be £70bn worse off.
Researchers reached this figure based on the assumption the UK will leave the bloc with a fair trade agreement after a transition period lasting up to 2021, while also negotiating deals with other countries.
NIESR economists reckon that higher barriers to goods, services and trade, plus restrictions on migration, will deliver a £70bn blow to the economy over 10 years.
But Brexit has already begun to hit Britain’s coffers, according to the institution.
In its report, which was released after Johnson agreed his Brexit deal with the EU in December, the institute estimated that the UK economy is already 2.5% smaller than it would have been if voters had chosen to back the Remain camp in the EU referendum.
'The cost of funds made available for Brexit preparation: £8bn'
Of course, the government has its own figures about the cost of Brexit.
When HuffPost UK asked the Treasury about how much it had spent preparing for the UK to leave the EU, it said it had made “more than £8bn” available since the EU referendum in June 2016.
But on what? The government’s breakdown actually looks pretty similar to the IfG’s report, with the Treasury reporting a £2.1bn spend on no-deal planning in 2019/20 and another £2bn pledged to help deliver Brexit next year.
When chancellor Sajid Javid announced the money for no-deal Brexit prep, he said it would be spent on a number of things, including:
- An extra 500 Border Force officers
- Improvements to transport infrastructure around ports
- £138m to boost public communications, including a new Brexit information campaign
- A £108m fund to help promote and support businesses preparing for Brexit
And the £2bn set aside to deliver Brexit in 2020/21? In its 2019 spending round, the Treasury said that this “core funding” would be given to departments in order to “help pay for the costs of establishing a new relationship with the EU”.
As such:
- £480m will be given to the Home Office, with funding to be spent on the Border Force and the delivery of the EU Settlement Scheme
- £432m will be handed to the Department for Environment, Food and Rural Affairs to deliver Brexit “while setting global standards in protecting and harnessing value from the natural environment”
- The Department of Business, Energy and Industrial Strategy will receive £191m to support the delivery of “Brexit-related activities”
- HMRC will also be given £382m