The first cost will be organisational capital. I read somewhere that managers are investing about two hours to per day rethinking supply chains.
The estimate of 2% is reasonable. Ed Prescott made some good arguments about trade clubs boosting growth in continental Europe. Those estimates are from a time when there is many more restrictions on trade and Brussels hadn’t got going on regulating everything in sight.
Ever since the 2016 referendum, economists have attempted to estimate what Brexit ‘has already cost’ the UK economy and households. It won’t be a surprise to see some of the most depressing numbers dusted off this week to mark the departure from the EU. But all these studies should be taken with a large pinch of salt. It would certainly be wrong to regard these numbers as gospel truth, or a reliable warning of (even) worse to come.
There are two main approaches to answering the question of what impact the referendum result has already had. One is ‘top-down’, which looks at the overall performance of the UK economy compared to its peers, usually measured by headline GDP growth. The other is ‘bottom-up’, which focuses instead on specific indicators, notably inflation and business investment, where it is relatively clear that the vote to leave has had a negative impact.
I’m…
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