As Britain approaches the tenth anniversary of the Brexit referendum, a clearer picture of its economic repercussions has emerged. Despite initial predictions of an immediate recession following the vote to leave the EU, the UK has instead experienced a protracted decline in economic performance, leaving households and businesses worse off. Analysts now confirm that while the anticipated economic downturn did not occur, the long-term costs of leaving the EU have been severe and far-reaching.
Long-Term Economic Consequences
The Treasury’s forecasts, which were heavily critiqued during the referendum campaign, suggested a looming recession. However, as former Bank of England deputy governor Charlie Bean highlights, the immediate crisis never materialised, leading some to dismiss these warnings as unfounded. Yet, he argues that while the economy did not collapse overnight, the broader long-term effects of Brexit have proven accurate: the UK is poorer than it would have been had it remained in the EU.
A report by the Office for Budget Responsibility suggests that the UK’s national income could be 4% lower over the next 15 years due to Brexit. Notably, research indicates that GDP per person is between 6% and 8% lower than it would have been without the decision to leave. According to Stanford economist Nick Bloom, the UK’s economic trajectory diverged significantly from other advanced economies post-2016, signalling that Brexit has negatively impacted growth.
Trade and Investment Struggles
The introduction of trade barriers following Brexit has severely impacted exports, particularly in goods. The EU remains the UK’s largest trading partner, with exports to the bloc valued at £385 billion in 2025. However, since the end of the transitional period in December 2020, the UK has seen a slowdown in goods exports compared to its G7 counterparts. Service exports, on the other hand, have fared better, largely due to the reduced friction in that sector compared to goods.
The uncertainty surrounding Brexit has also led to a significant drop in business investment, estimated to be nearly 18% lower than it would have been had the UK opted to remain in the EU. This investment freeze has contributed to stagnating productivity, with businesses hesitant to commit to new projects or equipment amid the shifting landscape. John Springford from the Centre for European Reform notes that the investment decline began in 2016 and persisted until clarity about trading relationships emerged.
Employment and Public Sentiment
While unemployment rates dipped following the Brexit vote, the true challenges of the labour market have become apparent in the years since. Experts indicate that real wage growth has stagnated, with only a modest increase observed recently. Additionally, the UK has lagged behind other G7 nations in workforce participation recovery post-pandemic, with significant numbers of young people now classified as not in education, employment, or training.
Public sentiment regarding Brexit has shifted considerably since the initial vote. Recent polling reveals that a substantial majority of Britons now favour a closer relationship with the EU, with many expressing support for rejoining the bloc. This change in opinion reflects growing concerns over the economic ramifications of leaving the EU, as well as the challenges presented by rising immigration and labour shortages.
Immigration Trends Post-Brexit
The promise of reduced immigration following Brexit has not materialised as anticipated. In fact, net migration to the UK reached a record high of nearly one million in the year leading up to June 2023. Changes to migration rules have resulted in a significant influx of workers from outside the EU, although the number of arrivals from EU countries has decreased. Employers across various sectors, particularly hospitality and construction, have grappled with staff shortages as a direct consequence of losing access to a ready pool of EU workers.
Why it Matters
The economic landscape of the UK has undeniably shifted in the decade since the Brexit vote. As households grapple with rising costs and businesses contend with investment uncertainty, the long-term consequences of the decision to leave the EU become ever more apparent. As public sentiment evolves, calls for a reassessment of the UK’s relationship with Europe grow louder, highlighting the profound impact Brexit continues to have on the nation’s economic future.
