Prangs to cars, accidents caused by the craters and consequent congestion all contribute to the whopping bill, experts found.
Damage relating to emissions caused by pothole-avoiding speed changes is also a factor, says the Centre for Economics and Business Research.
Douglas McWilliams, the report author, said: “Potholes waste drivers’ time, put cyclists’ lives at risk and damage the environment.
“The government can afford to act. Why doesn’t it?”
Chris Whitwood, standing as Phil Potholes in a Rotherham local election this week, insists people are simply “fed up” with the state of the roads.
He said: “Potholes harm the British economy and it shouldn’t take a genius to realise there is a connection between investing in infrastructure and economic growth.”
A government source said: “We’re investing in the biggest ever funding increase for local road improvements, made possible by £8.3billion of reallocated HS2 funding.
“To make sure councils do a good job, we’re making them publish their completed and planned works.”
The Government previously said that £38million would be spent on improving England’s deadliest roads.
But another report last month found that the potholes repairs backlog reached a record £16.3billion, up from £14billion a year ago.