Three Years On, Brexit Casts a Long Shadow Over the UK Economy
Three years after Britain left the EU, it has the lowest growth rate among G7 countries; the IMF forecasts it will be the only leading economy to shrink this year. While Brexit is not the only factor in this economic underperformance, it is an important one. Brexit’s impact on trade with the EU has been significant, with UK imports from the EU particularly affected. British businesses are facing record amounts of red tape, raising trade costs and disadvantaging smaller firms.
Trade is not the only casualty. Brexit has also undermined business investment in the UK economy, which is currently 31 per cent below the pre-referendum trend. Moreover, Britain’s overall economic performance today is worse than forecast before and after the 2016 referendum. A study by the Centre for European Reform estimates the UK to be 5.5 per cent poorer now than had it stayed in the EU.
Meanwhile, promised dividends have not materialised. The freedom to make trade deals has made no difference so far; Britain’s share of trade covered by free trade agreements has fallen from 64 per cent in 2019 to 62 per cent in 2021. The benefits of regulatory autonomy remain elusive due to potential costs for businesses.
In a new commentary, Anton Spisak and Christos Tsoukalis use six charts to demonstrate the comprehensive impact of EU exit on the UK economy. Britain’s political leaders, they say, must improve EU trade ties or risk further economic malaise.