The Remain campaign emphasised the economic fall-out from the loss of access to the EU market citing various economics research institutes.
Do we think their arguments are well supported? If not, does this carry the risk that the UK government’s policy responses may be inappropriate?
The current post-Brexit prognosis for the UK economy is for an economic slowdown, possibly a recession, based on loss of trade and a downturn in the domestic economy. It is argued that this will come through a decline in household expenditure (65% of GDP) and, coincidental with this, a fall in firms’ investment spending (another 17%).
These aggregates are large enough to slow the whole economy without offsetting changes in government’s own spending and/or the balance of payments.