How much has Brexit cost so far in terms of cumulative GDP per capita?
An analysis using the synthetic control approach
Brexit, or the withdrawal of the United Kingdom from the European Union, happened following a UK-wide referendum on 23 June 2016, more than 6 years ago. Due to the significant timespan since the event, the natural question arises of how to quantify its net financial effect.
As an example of such analysis, see the policy brief: “What can we know about the cost of Brexit so far?” authored by John Springford from the Center for European Reform.
For this analysis, I closely follow up the synthetic control method from the CausalPy documentation notebook, but using another publicly available dataset of quarterly GDP per capita (US $, current prices, current PPPs, seasonally adjusted) from the OECD.Stat database. The code is publicly available in Google Colab.
Here, I use the synthetic control method to extrapolate the British economy as a mixture of different chosen OECD countries before Brexit, and then to compare the evolution of the same mixture of countries after Brexit.
This plot show the evolution of normalised GDP per capita for chosen OECD countries:
