Brexit worse for the UK economy than Covid pandemic, says OBR, as Anglo-French relations sour

The impact of Brexit on the UK economy will far outweigh the crisis caused by the pandemic, according to the chairman of the Office for Budget Responsibility (OBR)

Richard Hughes said the OBR had assumed leaving the EU would reduce the country's long run GDP by around 4% but said the effect of the pandemic will reduce that (GDP) output by a further 2%.

Gross domestic product – or GDP – is a measure of the size of the economy.

“In the long term it is the case that Brexit has a bigger impact than the pandemic”, Hughes told the BBC, hours after the OBR responded to Rishi Sunak’s latest budget by saying it expected inflation to reach 4.4% while warning it could hit “the highest rate seen in the UK for three decades”.

Meanwhile, a major trade dispute has broken out between the UK and France after Paris banned British fishing boats from key ports.

The French government dramatically warned it will block British vessels from some ports next week if the post-Brexit dispute over fishing licences is not resolved.

Paris even went as far as suggesting it could restrict energy supplies to the Channel Islands if no deal is reached with the UK as relations since the EU departure further soured.

No 10 said the threats do not seem to be compatible with “international law” and vowed an “appropriate and calibrated response” if Paris does not back down.

A UK government spokesperson said: “France’s threats are disappointing and disproportionate, and not what we would expect from a close ally and partner.

“The measures being threatened do not appear to be compatible with the trade and cooperation agreement (TCA) and wider international law, and, if carried through, will be met with an appropriate and calibrated response. We will be relaying our concerns to the EU Commission and French government.”