'Significant damage': How Brexit is still draining the UK economy 10 years later
Ten years after Brexit, data shows that the decision to leave the European Union has made people in Britain up to 8 percent poorer. Experts predict the economic damage is set to continue, and YouGov…
When theUKvoted to leavetheEuropean Unionon June 23, 2016, the close-run result dumbfounded many and kickstarted a climate of political tension in the UK that has becomearguably worseever since. With polls finding that23% of leave votersnow regret their choice – either because they’ve changed their mind on Europe, or feel that politicians bungled the exit process – it seems many agree thatBrexithas not been a success. Watch moreBrexit: 10 years of regret?But there is one area where 10 years of data shows the true scale of its failure – economists now estimate that Brexit has reduced the UK'sgross domestic productbyas much as 8 percent. This means average the Briton is up to 8 percent poorer than if Brexit had never happened, while at the national level there is an equivalent "loss in tax revenue that the government is getting which it spends on public services”, said Jonathan Portes, professor of economics and public policy at King's College, London. Among economists, “there's a clear consensus that Brexit has done significant damage”, Portes added. ‘Pure hell’To analyse the Brexit data, economists at Stanford’s Institute for Economic Policy Researchused two models. The first compared the UK’s rate of growth over 10 years to other countries, factoring in global economic shocks such asCovid-19and the impact of wars inUkraineandthe Middle East. “Before the Brexit referendum, the UK was doing okay, and we've fallen behind relative to our peers since then,” said Gregory Thwaites, one of the authors of the Stanford study and associate professor of economics at the University of Nottingham. “Our economy is about 8 percent smaller than it would be if we had not left theEuropean Union, based on a comparison with other countries,” he added. The second method assessed firms within the UK to see how well those that have frequently interacted with the EU since Brexit performed compared with those that have not. It found that those still in high contact with the EU were performing significantly less well. “When you run those numbers, it looks like the UK is about 6 percent poorer than it would have been without having left the European Union,” Thwaites said. The UK's goods trade – especiallycarsandagri-food produce– has been hit particularly hard, as Brexit ramped up paperwork demands, making everyday procedures more time-consuming and costly for businesses. Farmers, food producers and food system workers take part in a march to demand more government ambition on UK food and farming policy, London, October 15, 2022. © Alberto Pezzali, APThe owner of a UK logistics company told a government committee in January that it was “pure hell” to acquire asheaf of paperwork with 26 stampsto export lamb and beef to the EU – as opposed to the single sheet needed before Brexit. There are hopes that the UK and EU will implement a new agreement toease trade, particularly for dairy products, eggs, fish and fresh red meat, that would come into effect from summer 2027. But that will come too late for the businesses that have already folded under increased demands. UK food exports to the EU haveshrunk by nearly a quartersince Brexit came into effect, according to Britain’s Food and Drink Federation. Read moreUK to rejoin Erasmus student exchange programme in post-Brexit resetBrexit ‘held the UK back’At the same time, the impact of Brexit has made a significant contribution to UKfood price inflationthat has seen basics such as orange juicesoar by 134 percent. While higher earners may be able to absorb the price hikes and stagnating wages that have impacted Britons across the board since the referendum, it is more difficult for others. “It hits the bottom harder, and that means that the poor are suffering more,” Thwaites said. However, he added, it is not as simple as drawing a straight line from Brexit to potential indicators of poverty – such as thesoaring use of food banksin the UK over the past 10 years – as there are so many other societal and economic factors at play. A volunteer puts together food parcels at Bradford Central Foodbank in northern England on May 24, 2022 as a growing number of Britons struggle to buy basics. © Oli Scarff, AFP“Brexit has never been the UK's only [economic] problem by any means,” said Portes. “Like other European countries, it has lots of problems withlack of investment, slow growth and lack of innovation – but Brexit, over and above these, has held the UK [economy] back. ”The 10-year drain Brexit has been on the UK economy came at a time when the country couldlittle afford it. Welfare, health care and education services have never fully recovered fromausterity cutsimplemented by former prime ministerDavid Cameron’s government in the 2010s – the same governmentthat called the Brexit referendum. Watch more'Brex-what?' Episode 2: Why did Cameron call the referendum?Meanwhile, prisons are in a"dire" state, the national road network isfalling into disrepair, and the UK’s defence chief has warned that, without investment, the armed forces will have to undergooperational cuts. Ten years on from a referendum that shrank the UK economy and reduced tax revenue,poverty levels are risingand public services are crumbling. “The ways to mitigate it are to try and reverse some of the damage from Brexit directly, by negotiating a closer arrangement with the EU, and to run the country as well as possible in every other respect,” Thwaites said. But as the aftershocks of Brexit continue to ripple through the economy, there seems little hope of recovery any time soon. “My forecast would be that the damage continues roughly the same level that it's at now,” he said.