Brexit’s impact on the UK economy will be far worse than the Covid pandemic and lockdowns, the head of the official Budget watchdog has declared.

Richard Hughes, chairman of the Office for Budget Responsibility, suggested the economy hit be hit twice as badly by the end of the UK’s EU membership in 2020.

He told the BBC the OBR had assumed leaving the EU would "reduce our long run GDP by around 4%" - while “we think the effect of the pandemic will reduce that output by a further 2%."

Mr Hughes added: "In the long term it is the case that Brexit has a bigger impact than the pandemic",

He was backed by Paul Johnson, chairman of the respected IFS economic think tank.

Mr Johnson said: “High inflation, rising taxes, and poor growth, still undermined more by Brexit than by the pandemic, will see real living standards barely rising and, for many, falling over the next year.”

Mr Hughes issued the bombshell verdict despite Rishi Sunak trying to play down the impact of leaving the EU.

The Chancellor boasted he was “taking advantage of leaving the EU” to reform alcohol duties and set up Freeport’s.

Asked today if he agreed with his own independent watchdog, Mr Sunak told the BBC: “We’ve had all these debates multiple times and at this point now it’s five years ago.

“That’s their view.

“What I’m doing is making sure we capitalise on the opportunities that Brexit has brought.”

Boris Johnson ’s official spokesman also refused to back the findings of the OBR.

The spokesman said: “This is a Budget that set out the agility and flexibility and freedom that’s provided by Brexit, and how valuable that is in a 21st Century global economy.”

Both Brexit and Covid have been blamed for a shortage of HGV drivers which has led to empty shelves and supply shortages.

Both Brexit and Covid have been blamed for a shortage of HGV drivers which has led to empty shelves and supply shortages (

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Getty Images)

The OBR found exports to the EU have fallen by 10% since trading rules changed in January 2021 - while imports from the EU to the UK have fallen by 15%.

And economists fear those totals could rise higher as grace periods - where checks are suspended - come to and end.

The OBR’s analysis of Mr Sunak’s Budget said: “We expect the full impact of Brexit on trade to be manifest only after all the terms of the TCA have been fully implemented and businesses have had time to adjust fully to the change in trading conditions, including reorganising their supply chains.”

Ian Mulheirn, Executive Director for UK Policy at the Tony Blair Institute, said: “While the Chancellor trumpeted newfound ‘Brexit freedoms’ to reform alcohol duties, what he didn’t mention was that Brexit has cut annual tax revenues by around £30bn.

“This means that without the Brexit shock most of the past year’s £40bn tax raid would have been unnecessary.”

It came as Downing Street vowed to retaliate against France if Paris goes ahead with a "disappointing and disproportionate" threat to impose sanctions in an escalation of a row over fishing boats.

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.

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