Impacts of Covid and Brexit hard to uncouple, MPC appointee Dr Swati Dhingra

Dr. Swati Dhingra said that the impacts of Covid and the impacts of Brexit are still difficult to differentiate. 

In an oral evidence session following her appointment to the Monetary Policy Committee, Dr. Dhingra said “We’re still struggling with how to distinguish between the impacts of Covid and Brexit,” with the EU exit date coinciding with the pandemic.

She said she was cautious about saying all excess inflation is driven by Brexit. “We need much more granular assessments of how things are panning out,” now that Brexit has taken place, she said.

When asked about the trade intensity of the UK economy compared to other countries, which fell but moved back up after economies opened up, Dr. Dhingra said that was the most tell-tale sign of something deeper happening. 

“We’ve tried to compare Britain’s international peers’ openness with the openness of the UK. There you do see evidence that the UK’s openness has declined more than its peers,” she said, but she could not say with certainty the reason behind that. “I still don’t know if I can say categorically that that means Brexit holding effect or Covid holding effect.” 

Dr. Dhingra will join the MPC as an external member on 9 August 2022, replacing current external member Michael Saunders who has been on the MPC since August 2016.

She is an Associate Professor at the London School of Economics, specialising in international economics and applied microeconomics.