As the 10th anniversary of the Brexit referendum approaches, the UK’s economic landscape reveals the significant costs borne by households and enterprises alike. While predictions of an immediate recession post-referendum did not materialise, the long-term effects have been profound, resulting in a contraction of the economy, sluggish trade, stagnant business investment, and diminished household finances.
A Mixed Economic Picture
Initially, forecasts from the Treasury, led by George Osborne, warned of a looming recession, a scenario dubbed “Project Fear” by Brexit proponents. Yet, while the anticipated economic collapse did not occur right away, the repercussions of leaving the EU have proven to be detrimental over time.
Experts now concur that the UK economy is considerably smaller than it would have been had it remained within the EU. Charlie Bean, a former deputy governor of the Bank of England, stated, “In hindsight, we had the vote and the world didn’t fall off the cliff immediately… But the assessment of the broad long-run was in the right ballpark. We’re poorer than we otherwise would have been.”
Currency Fluctuations and Trade Impacts
Following the referendum on 23 June 2016, the pound experienced significant volatility. Initially, the currency surged when it seemed like the Leave campaign was losing, only to plummet by 10% when results indicated otherwise—a record one-day fall. This depreciation raised import costs, leading to an inflation surge that has strained public finances and household budgets.
A decade on, the pound remains below its pre-referendum value, currently trading at approximately $1.34 against the dollar and €1.15 against the euro. This decline has particularly affected British holidaymakers, who face higher costs abroad.
Despite a weaker currency typically benefiting exporters, uncertainty surrounding trade has stunted their potential growth. In 2025, exports to the EU accounted for £385 billion, representing 41% of all UK exports, yet businesses have struggled to capitalise on a weaker pound due to trepidation over market conditions.
Investment and Growth Stagnation
The anticipated recession never materialised largely due to the prolonged transition period following the referendum. However, the Office for Budget Responsibility has projected a 4% reduction in national income over a 15-year span due to the consequences of Brexit.
Research from Stanford University’s Nick Bloom and others indicates that UK GDP per capita is now 6% to 8% lower than it would have been without Brexit. The gap in economic performance relative to other advanced economies widened significantly after 2016, highlighting a troubling trend of stagnation.
Investment has also taken a hit, with estimates suggesting it is 18% lower than it would have been under a remain scenario. John Springford from the Centre for European Reform noted that the initial shock of the referendum led to an “investment strike” that persisted until a clearer understanding of the new trading relationship emerged.
Employment Challenges and Changing Public Sentiment
While unemployment rates fell post-referendum to some of the lowest levels seen since the 1970s, the pandemic revealed deeper issues within the workforce. Real wage growth has been lacklustre, and Britain has lagged behind other G7 nations in workforce participation recovery. The number of young people not in education, employment, or training (NEET) has surged to over a million—its highest level since 2013.
Public support for Brexit has waned significantly since the narrow 52%-48% vote. Recent polling indicates that 70% of the British populace now favours a closer relationship with the EU, while a majority would even consider rejoining outright, reflecting a growing disillusionment with the outcomes of leaving the bloc.
Migration Trends Post-Brexit
Contrary to pre-referendum promises, net migration to the UK surged to nearly one million in the year leading up to June 2023. While the war in Ukraine and the easing of COVID-19 restrictions played a role, changes to immigration rules following Brexit also contributed to this influx.
However, net migration from the EU has decreased, creating significant staffing shortages in sectors such as construction and hospitality. Stricter controls introduced by both the Conservative and Labour governments have further tightened migration flows, with net migration dropping to 171,000 last year.
Why it Matters
The economic ramifications of Brexit are profound and far-reaching, affecting every corner of British life. With households feeling the pinch from stagnant wages and rising costs, and businesses grappling with uncertainty and reduced investment, the long-term effects paint a sobering picture. As public sentiment shifts towards a desire for closer ties with the EU, the UK must grapple with the reality of its choices and their implications for the future.
