Navigating the Salty Waters of Post Brexit Britain
Updated March 2023
Two years after the UK formally exited the EU, the impact of Brexit on the UK economy is evident. The signing of the free trade agreement is considered by many to be the real economic start of Brexit. The UK’s GDP growth rate of 14.3% between Q2 2016 and Q3 2021 is lower than four of the EU’s largest economies. The UK’s Office for Budget Responsibility predicts that the long-term impact of Brexit will be worse for the economy than Covid-19, with Brexit reducing the UK’s potential GDP by 4%. Meanwhile, UK-EU trade has significantly decreased since the trade agreement was unveiled, while UK exports to non-EU countries increased by 4.6% during the same period.
However, the overall value of UK exports fell by 0.7% from February 2020 to November 2021. This comes at a time when global trade elsewhere is booming post-Covid-19. These indicators suggest that the UK economy will have difficulty rebounding as quickly as other advanced economies, particularly as the EU remains its largest trading partner. Source
Post Brexit Fallout: A Brief Overview
Blimey! The UK’s Post Brexit fiasco has taken a toll. A top official from the Bank of England says that the country has lost £29 billion in business investment since the 2016 referendum – that’s £1,000 per household! Private sector investment has halted, causing a gaping productivity gap and leaving the UK’s economy worse off than other major economies. Many are worried that Boris Johnson’s decision to leave the EU single market and customs union has irreversibly damaged the country’s economy.
A recent meeting attended by leave and remain campaigners, including Michael Gove and Keir Starmer’s shadow cabinet members, was held secretly to discuss ways to improve the situation. Whilst previous studies have focused on trade, Jonathan Haskel’s study used business investment as a measure and found that the long-term GDP loss would be similar to the 3.2% figure based on goods trade volumes. By 2026, the difference between current levels of business investment and the trajectory before 2016 will amount to 2.8% of GDP. If the UK had continued to experience the same level of business investment as other countries, it wouldn’t be in such a pickle!
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