An analysis of electricity consumption data shows that economic activity in England and Wales has slumped after the June 23 Brexit vote, according to new research from the London School of Economics (LSE).
Researchers used ‘residual’ electricity consumption as a proxy for activity in the services and manufacturing economies to demonstrate how, on average, demand for electricity since the Brexit vote has dramatically under-shot what would have been expected had the United Kingdom voted to remain in the European Union.
While there has been some volatility in consumption since the vote, in November it levelled off to being consistently below what it was prior to the Brexit vote, the research reveals.
‘Residual’ electricity consumption is electricity use that cannot be explained by other factors, including cold weather or public holidays. It is highly correlated with economic activity.
Tom Kirchmaier, LSE researcher and author of the paper, said: “This research should unsettle those who are pinning their hopes on the government’s industrial strategy boosting the economy. It strips away the benefits the country has experienced because of a weak pound, such as increased tourism, and shows us what is really happening under the bonnet, in the economy’s real engine.”
For the paper titled ‘Turning on the light: assessing the impact of Brexit using electricity demand as a proxy’, the academics created a model which predicts what electricity demand would be on a typical day, in a typical week of any year and then compared these expectations to what happened after the referendum in June 2016.