The decision to leave the European Union in 2016 has left the UK grappling with profound economic consequences, from slashed trade to dwindling jobs and a £140 billion hit to the economy. Eight years on, the numbers paint a stark picture of Brexit’s cost, with losses mounting and no clear end in sight.
Economists overwhelmingly predicted that Brexit would harm the UK’s economy, and evidence confirms their warnings. A 2024 report by Cambridge Econometrics, commissioned by London City Hall, estimates the UK economy is £140 billion smaller than it would have been had the UK remained in the EU’s Single Market. This translates to a 5.5% GDP reduction by mid-2022, with projections suggesting a staggering £311 billion loss by 2035. The average Briton was £2,000 worse off in 2023, while Londoners faced a £3,400 hit, reflecting the capital’s heavy reliance on EU trade. The report also highlights a loss of 1.8 million jobs nationwide, with 290,000 fewer in London alone, particularly in financial services and construction.
Trade, the lifeblood of the UK’s economy, has taken a severe beating. The Office for Budget Responsibility (OBR) assumed in 2016 that Brexit would reduce trade intensity by 15%, a figure still considered accurate in 2023. UK goods exports to the EU plummeted 27% and imports dropped 32% between 2021 and 2023, largely due to non-tariff barriers like increased paperwork and regulatory checks. Smaller businesses, like Joe & Seph’s popcorn, faced crippling costs—delivery fees per pallet jumped from £130 to £250 due to administrative burdens. The variety of exported goods has also shrunk, with 1,645 fewer product types sent to each EU country, as many small firms simply stopped exporting.
Investment has also suffered. Goldman Sachs estimates Brexit shaved 4–8% off real GDP, driven by reduced business investment and labour shortages from lower EU migration. Companies, wary of uncertainty, cut investment by 11% in the three years post-referendum, while productivity dropped 2–5% as firms diverted management time to navigate Brexit’s red tape. The UK’s trade openness—measured as trade relative to GDP—fell 8 percentage points between 2019 and 2021, a decline sharper than in comparable economies, underscoring Brexit’s role over pandemic-related disruptions.
Migration changes have compounded the damage. The end of free movement in 2021 slashed EU immigration, with net EU migration plummeting. While non-EU migration, particularly students, has risen, it hasn’t offset the loss of economically active workers. Sectors like hospitality and agriculture face acute labour shortages, with 45% of Scottish tourism businesses reporting staff deficits. A 2017 study warned of a “significant negative impact” on GDP per capita due to reduced migration, a prediction now evident in labour market strains and rising inflation.
The pound’s value tells another grim story. Post-referendum, sterling crashed 8% in minutes, hitting a 31-year low against the dollar. The persistent 15–20% depreciation since 2016 has fuelled inflation, with consumer prices rising 3.4% by late 2017 and “shrinkflation” becoming common as retailers cut product sizes to mask price hikes. Food inflation, eight times higher than it would have been in the EU, has exacerbated the cost-of-living crisis, with Brexit identified as a key driver.
Some sectors have shown resilience. Tobacco, railway, and aircraft exports to major EU economies like Germany and France have grown, and industries like finance and technology have seen pockets of opportunity. However, these gains are dwarfed by losses elsewhere. The service sector, which accounts for 80% of UK GDP, faces barriers under WTO rules in a no-deal scenario, potentially costing 5% of GDP over a decade. Even the UK’s new trade deals, like those with Australia and Japan, offer minimal relief, boosting GDP by just 0.1% over 15 years.
Public sentiment reflects the economic pain. Two-thirds of Britons, including one in five Leave voters, believe Brexit has harmed the economy. Polls show growing support for closer EU ties, with calls from figures like London Mayor Sadiq Khan to rethink the Trade and Cooperation Agreement. Yet, the government insists on leveraging “Brexit freedoms,” such as repealing EU financial laws, despite evidence that regulatory divergence increases business costs.
The fiscal fallout is equally sobering. While the UK no longer pays £14.4 billion annually to the EU budget (net £8 billion after rebates), the economic slowdown has slashed tax revenues. The Centre for European Reform estimates that without Brexit, 2022 tax rises of £46 billion could have been avoided. Regional disparities are stark—England and Scotland face GDP losses of 7–8.7%, while Northern Ireland, benefiting from the Protocol, has seen trade gains.
Brexit’s economic toll—£100–140 billion annually, millions of jobs lost, and a weaker pound—has reshaped the UK’s trajectory. With forecasts predicting further decline, the challenge is clear: mitigate the damage through closer EU ties or face a deepening economic malaise.
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