By Helen Reid
LONDON (Reuters) - Britain's chaotic exit from the European Union has cost the economy about 600 million pounds per week since the 2016 referendum, Goldman Sachs (NYSE:GS) said on Monday in a report that underscores how Brexit uncertainty has dented investment.
The report found that Brexit had cost the world's fifth largest economy nearly 2.5 percent of GDP at the end of last year, compared to its growth path prior to the mid-2016 vote on exiting the bloc.
It has also lagged other advanced economies.
"Politicians in the UK are still struggling to deliver on that vote," Goldman Sachs economists wrote in a note to clients.
"The resulting uncertainty over the future political and economic relationship with the EU has had real costs for the UK economy, which have spilled over to other economies."
The U.S. bank said Brexit uncertainty has been a major driver of economic output losses as they are concentrated in investment.
"Uncertainty shocks weighed on investment growth in the immediate aftermath of the Brexit vote, as well as more recently amid the renewed intensification of Brexit uncertainty," the economists said.
The bank's estimates came as data showed factories in Britain stockpiled for Brexit at an explosive rate last month, unlike anything seen before in a major rich economy and a prelude to a likely sharp investment shortfall ahead.
Britain's parliament will vote on different Brexit options on Monday, after the third defeat of Prime Minister Theresa May's Brexit divorce deal left it still uncertain how, when or even whether the UK will leave the EU.
In a no-deal Brexit, a scenario Goldman sees a 15 percent chance of, UK GDP would fall by 5.5 percent and a "substantial" global confidence shock would see sterling depreciate by 17 percent.
European countries would be most exposed to this scenario, the economists estimated, and could see output losses of around 1 percent of real GDP.
A Brexit transition deal would reverse part of Britain's economic output lag, with limited foreign spill-overs, they said, estimating UK GDP would grow by a cumulative 1.75 percent and sterling would appreciate by 6 percent.
A scenario in which Britain remains in the EU after all would see it fully recoup Brexit-related output costs and drive a rebound in business confidence while sterling would appreciate by 10 percent.
Overall, the drag from weaker UK growth has been felt most strongly in countries with larger export exposure to the UK, such as Germany and France, the economists said.
"While a 'deal' would certainly be positive for the UK economy, only 'no deal' would trigger substantial spill-over effects, with European countries being most exposed," they added.