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Brexit's 6% Hit: UK Economy Suffers Decade of Lost Growth
19 Jun
Summary
- UK economy lost 6% due to Brexit, according to internal Bank of England data.
- Half the economic impact stemmed from post-referendum uncertainty.
- Rising trade barriers after 2021 account for the remaining economic damage.
An analysis of internal Bank of England data indicates the UK economy has experienced a 6% reduction in growth over the decade since the Brexit referendum. Researchers reconstructed potential growth trajectories without the referendum's influence, utilizing company-level data normally employed for interest rate decisions. This data revealed that initial uncertainty and surprise post-vote accounted for roughly half the economic impact.
The remaining economic deficit is linked to the implementation of trade barriers following the UK's departure from the EU's single market and customs union in 2021. Co-author Professor Nick Bloom highlighted that the Bank of England's company data provides significant corroboration for these findings. While some critics suggest the study might not fully account for global economic factors like US industry outperformance or the European energy shock, the research used multiple analysis methods, including this unique company-level data.
Bank of England officials have recently become more vocal about Brexit's economic repercussions. Governor Andrew Bailey stated that reduced export markets due to Brexit negatively impact growth and productivity. Despite the adverse effects on financial services, Bailey noted the impact was less severe than initially predicted by many.
