Brexit hurting economy 'more than pandemic'

The damage wreaked upon the United Kingdom's economy by its decision to leave the European Union eclipses the economic carnage created by the novel coronavirus pandemic, the chairman of the nation's official fiscal watchdog has said.

Richard Hughes told the BBC the Office for Budget Responsibility expects the UK's exit from the EU to shrink gross domestic product, or GDP, by "around 4 percent "in the long-run.

"We think that the effect of the pandemic will reduce (GDP) output by a further 2 percent," he told the broadcaster. "In the long term, it is the case that Brexit has a bigger impact than the pandemic."

Speaking after the nation's finance minister, Chancellor of the Exchequer Rishi Sunak, unveiled his spending and taxation plans in his latest budget on Wednesday, Hughes said his watchdog, known as the OBR, now predicts sharply rising inflation.

He said, with both Brexit and the pandemic denting GDP, which is the measurement of the size of the economy, the OBR expects inflation to hit 4.4 percent, which will be "the highest rate seen in the UK for three decades".

The Telegraph newspaper, which supports the ruling Conservative Party, noted that, while inflation will likely surge past 4 percent in 2022, it should fall back to 2.6 percent in 2023, and 2.1 percent in 2024.

The Bank of England, which is the UK's central bank, has, however, set a goal of limiting inflation to 2 percent and rates have been significantly lower in recent years.

The Guardian newspaper noted the OBR forecast says the UK government will collect an additional 4 billion pounds ($5.5 billion) in "value added tax", or VAT, this year, because of the rise in the cost of living.

That cost-of-living hike has been triggered by fast-rising prices for food and household goods caused by supply problems created or exacerbated by both the pandemic and the nation's exit from the EU.

The Resolution Foundation think tank added in the aftermath of the budget announcement that UK households will now spend 3,000 pounds more every year on taxes than they did before Prime Minister Boris Johnson came to power.

Ironically, Johnson's Conservative Party traditionally campaigns on being the UK's party of low taxation and frugal public spending.

The think tank said Sunak's budget contained policies that amount to a 2.8 percent boost in the incomes of the UK's poorest fifth of families.

The Financial Times said the think tank said middle-income families will be 2 percent worse off because of the budget.

Sunak told lawmakers when unveiling his budget: "Taxes are rising to their highest level as a percentage of GDP since the 1950s. I don't like it, but I cannot apologize for it. It's the result of the unprecedented crisis."

With Sunak a strong Brexit supporter, lawmakers likely assumed the crisis he was talking about was the pandemic and not Brexit.