As Britain approaches the tenth anniversary of the Brexit referendum, the economic consequences of leaving the European Union have become increasingly clear. Contrary to the optimistic forecasts by proponents of the Leave campaign, the nation is grappling with significant financial challenges. Although the immediate recession many anticipated did not materialise, a range of factors—including the COVID-19 pandemic and geopolitical tensions—have obscured the long-term repercussions of Brexit, leaving households and businesses worse off.
Economic Performance: A Mixed Bag
The predictions made by the Treasury under George Osborne, which were dismissed by Brexit supporters as “project fear,” suggested a dire economic future. While the anticipated recession did not occur immediately, experts now agree that the UK economy is substantially smaller than it would have been had it remained within the EU. Charlie Bean, a former deputy governor of the Bank of England, noted that although the immediate fallout from Brexit was less severe than expected, the long-term consequences are undeniable. “We’re poorer than we otherwise would have been,” he stated, reinforcing the view that the initial assessments of potential economic fallout were, in fact, accurate.
The Pound’s Plummet and Trade Deficits
Since the referendum on June 23, 2016, the value of the pound has fluctuated dramatically. Following the announcement of results, the currency experienced a sharp decline, falling by 10% in a single day. This depreciation has had a profound effect on imports, driving up costs and contributing to inflation, which has hit households hard. Currently, the pound stands at approximately $1.34 and €1.15, significantly lower than its values of $1.50 and €1.31 before the referendum.
Exporters, who typically benefit from a weaker pound, have struggled to capitalise on these advantages due to ongoing uncertainties surrounding trade. Much of the UK’s trade continues to rely heavily on the EU, with exports to the bloc amounting to £385 billion in 2025. However, the introduction of new trade barriers has created friction, particularly for goods, leading to slower growth in exports compared to other G7 nations. As Nick Bloom, an economist at Stanford University, explained, the additional red tape and border delays have stifled demand, making it harder for businesses to thrive.
Stagnation in Investment and Productivity
The uncertainty surrounding Brexit has led to a freeze in business investment, with estimates indicating that investment levels are about 18% lower than they would have been if the UK had remained in the EU. This stagnation has direct implications for productivity, which is estimated to be up to 4% lower. John Springford from the Centre for European Reform stated that the political turmoil following the referendum resulted in businesses hesitating to invest in new projects or equipment, leading to a decline in productivity as existing resources deteriorated.
Moreover, while employment rates initially fell, the pandemic has since exacerbated challenges in the labour market. Real wage growth has stagnated, with average wages only marginally increasing post-pandemic. Young people have been particularly affected, with the number of 16- to 24-year-olds not in education, employment, or training rising to over a million—marking the highest level since 2013.
Changing Public Sentiment on Brexit
As the decade since the Brexit vote unfolds, public support for leaving the EU has waned significantly. Recent polling from YouGov reveals that 70% of Britons favour a closer relationship with the EU, while a majority support rejoining the bloc outright. This shift in sentiment is particularly pronounced among younger voters and those aligned with the Labour and Green parties.
Despite promises made during the Leave campaign regarding net immigration, the reality has diverged sharply. While net migration surged to nearly one million in the year leading up to June 2023, recent figures indicate a decline to 171,000, largely due to stricter immigration controls. Employers across various sectors continue to grapple with staff shortages, particularly in industries that previously relied on a steady influx of EU workers.
Why it Matters
The economic ramifications of Brexit have left lasting scars on the UK, reshaping its trading landscape and eroding financial stability for many households. As the nation reflects on the past decade, the need for a pragmatic approach to reinvigorate the economy becomes increasingly apparent. With public sentiment shifting and a growing call for closer ties with the EU, the future trajectory of Britain’s economy hinges on how policymakers address these ongoing challenges. The lessons learned from this tumultuous period will be pivotal in shaping the UK’s economic landscape for years to come.