The Bank of England has said that Britain is facing a fresh round of austerity because of the fact that there is a new round of austerity.
Michael Saunders, a former external member of the Monetary Policy Committee, said in an interview with Bloomberg TV that the UK economy as a whole has been damaged by Brexit.
He said if we hadn't had a Brexit, we probably wouldn't be talking about an austerity budget this week because it reduced the economy's potential output significantly and eroded business investment. If Brexit hadn't reduced the potential output of the economy, there wouldn't be a need for tax rises, spending cuts wouldn't be there. Saunders joined the rate-setting committee shortly after the results of the 2016 referendum and left the role in August this year.
He said that the main legacy of the period was weak economic output.
The prime minister, Rishi Sunak, and the chancellor, Jeremy Hunt, have both warned that the autumn statement will probably include spending cuts and tax rises.
Hunt is going to address Parliament on Thursday, but he said last week there would be a tough road ahead. According to Bloomberg, the US dollar value of shares listed in London had been overtaken by Paris.
London has lost its crown as the biggest hub for stock market listings in Europe.
Asked about this turn of events, Saunders said it was only one illustration of the broader damage caused by Brexit.
The pound's depreciation was a likely factor behind the shift in fortunes after both the referendum and the mini-budget were created by Liz Truss.
Market valuations for mid-sized listed firms with a large share of their activities in the UK have been depressed due to long-term concerns about consumer resilience in the face of the cost of living crisis.
Saunders said that some of the intentions behind Truss's failed mini-budget were correct. The ceiling under which can generate non-inflational growth was well founded by the ambition to raise the potential of the UK economy.
In her brief failed premiership, Liz Truss got that one point right. The methods of cutting taxes and pushing for deregulation chosen by Truss and her chancellor, Kwasi Kwarteng, were less wise.
He said that he put more of an emphasis on trade links with the EU, along with investing in education and addressing long-term sickness among working-age people.
His comments echo those of investors who said that the UK could improve its non-inflational productivity if it revisited its trade links with the continent.
There was a suggestion to increase the amount of skilled and unskilled workers by allowing more immigration into the UK.