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Jonathan Portes is professor of economics and public policy at King’s College London
We’re used to hearing apocalyptic descriptions of the impact of the Covid-19 pandemic on the UK economy: “the largest fall in economic output since 1709”, was the Office for National Statistics’ verdict eight months ago.
Yet the Office for Budget Responsibility, in its report on Wednesday’s budget, estimates that the long-term impact of Brexit will be more than twice as great as Covid.
It thinks that Brexit will reduce UK productivity, and hence GDP per capita, by 4%, while the impact of Covid on GDP will only be 2%, with a slightly smaller impact on GDP per capita.
No model includes everything. The OBR’s is no exception.
It hasn’t accounted for the damage done to education during the pandemic, especially for poorer kids.
Here, the government’s failure to fund a serious catch-up programme could leave permanent scars – both economic and social.
And, on the other side, a more liberal migration system towards non-European migrants could, in principle, offset some of the damage of Brexit.
But so far, it looks as if, from an economic perspective, Covid is for Christmas, while Brexit is for life.