The Brexit vote, a decade ago, has left an indelible mark on Britain's economic landscape, with the country now significantly poorer than it would have been had it remained in the EU. This is not merely a matter of political debate but a tangible reality reflected in various economic indicators. The pound's performance, trade dynamics, business investment, employment, and public sentiment all paint a picture of a nation grappling with the aftermath of a decision that was supposed to bring prosperity. In this article, I delve into the economic consequences of Brexit, offering a critical analysis and personal perspective on why the verdict on Britain's economic performance is clear: voting to leave has resulted in severe costs for households and businesses.
The Pound's Plunge
One of the most immediate and visible impacts of Brexit was on the value of the pound. The currency's value swung wildly after the 2016 referendum, with the pound plunging by 10% on the day of the vote. This was not just a one-time event; the pound has never returned to its pre-Brexit level. The collapse in the pound's value drove up the cost of importing goods, triggering an inflation shock that damaged public finances and inflicted financial pain on households across the country. The uncertainty surrounding the trade relationship with the EU also sapped business confidence, leading to a freeze in investment plans. This uncertainty, coupled with the added red tape and border delays, has made it harder for exporters to take advantage of a weaker currency, further exacerbating the economic challenges.
Slower Growth, Lower Productivity
The Treasury's forecasts, which predicted an immediate recession, did not materialize in the form of a deep economic downturn. However, the long-term forecasts were on the money. The UK's GDP per head is between 6% and 8% lower than it would have been without Brexit, according to analysis by Nick Bloom and others. This slower growth is not just a statistical anomaly but a tangible reflection of the economic challenges faced by households and businesses. The investment strike that began in 2016 and continued through to 2021-22, coupled with the reluctance to invest in equipment and projects due to uncertainty, has led to a productivity growth stall. This stagnation is more a story of slow puncture than of recession and rising unemployment.
Trade Barriers and Border Friction
Brexit involved erecting trade barriers, which has hit goods exports. The EU remains the UK's largest trading partner, with exports to the bloc worth £385bn in 2025, accounting for 41% of all UK exports. However, since the end of the EU transition period, growth in UK goods exports has slowed relative to the G7. This is not just a statistical observation but a tangible reality for businesses facing increased red tape and border delays. The situation is akin to a shop moving from the center of town to the outskirts, making it harder for customers to access the products and services on offer.
Employment Challenges
Unemployment in the UK fell after the Brexit referendum to among the lowest rates since the 1970s, but this masked underlying challenges. Wage growth has stagnated, with average real wages barely growing until picking up strength after the pandemic. Even given recent faster growth, wages are only £43 a week higher on average, after taking inflation into account. Britain emerged as the worst-performing country in the G7 for the pace of its recovery in workforce participation after the easing of pandemic restrictions, with rising ill-health pushing up economic inactivity. Young people have borne the brunt of weaker participation rates, with more than a million 16- to 24-year-olds not in education, employment, or training (Neet).
Fading Support and Net Migration
Public support for Brexit has steadily fallen since the 52%-48% leave vote. Polling last month by YouGov shows 70% of Britons support a closer relationship with the EU without rejoining the bloc, its single market, or customs union. More than two-thirds think looser ties would be a mistake, and a majority would back rejoining the bloc outright. This shift in public sentiment reflects a growing realization of the economic costs of Brexit. Net migration to the UK rose sharply post-Brexit, reaching a record high of almost 1m in the year to June 2023, but has since fallen amid tougher controls introduced under the Conservatives and further tightened under Labour.
Conclusion
The economic consequences of Brexit are multifaceted and far-reaching. The pound's plunge, slower growth, lower productivity, trade barriers, employment challenges, and fading support all paint a picture of a nation grappling with the aftermath of a decision that was supposed to bring prosperity. As we look back on the decade since the Brexit vote, it is clear that the verdict on Britain's economic performance is not just a matter of political debate but a tangible reality. The assessment of the broad long-run was in the right ballpark, and we are poorer than we otherwise would have been. The question now is whether the UK can navigate the challenges ahead and emerge stronger, or whether the economic costs of Brexit will continue to weigh on the nation for years to come.
