As the tenth anniversary of the Brexit vote approaches, economists are clear that leaving the European Union has inflicted lasting damage on Britain’s economy. While the immediate recession predicted by the Treasury did not materialise, long-term forecasts have proven accurate: the economy is significantly smaller than it would otherwise have been, trade has suffered, and families are on average thousands of pounds a year worse off.
The pound crashed by 10% on the day after the referendum and has never regained its pre-Brexit level, driving up import costs and triggering an inflation shock. Exporters failed to benefit from the weaker currency due to uncertainty and trade barriers. According to the Office for Budget Responsibility, the UK is on track to suffer a 4% hit to national income over 15 years.
Research from Stanford economist Nick Bloom shows that UK GDP per head is between 6% and 8% lower than it would have been without Brexit, based on comparisons with 33 other advanced economies. “The statistics are really clear: the UK has grown more slowly after Brexit than before,” Bloom said, noting a clear gap opening up after 2016.
Trade barriers erected post-Brexit have slowed goods exports relative to the G7, while service exports fared better. The UK-EU trade deal created more friction for goods, with exporters facing red tape and border delays. Charlie Bean, former Bank of England deputy governor, said the long-run assessment “was in the right ballpark. We’re poorer than we otherwise would have been.”
