Brexit Has Had a Negative Impact on the U.K. Economy

Brexit Has Had a Negative Impact on the U.K. Economy

Time Stamp: January 31, 2023 12:00 AM
Source Node: 1932811

Three years after the U.K. left the European Union, the latest data suggest a hit to the economy, but in some unexpected ways, reports BBC News.

As the U.K. pulled out of the single market and customs union in 2021, there was an initial dip in the amount the U.K. exported to the EU. Once teething problems were dealt with, trade volumes, recovered to pre-pandemic levels, according to official figures. But it could be argued trade might have grown more if it hadn’t been for Brexit.

Most nations saw international trade collapse at the height of pandemic. Since then, the rest of the G7 countries have seen trade, when compared to the size of their economies, bounce back in a way that hasn’t happened in the U.K.

If you look at the U.K.’s trade with the rest of the world, as well as trade with the EU, overall it has fallen relative to the size of the U.K. economy. Trade hasn’t bounced back post-pandemic as fast as it has in other major nations, it has become less important in contributing to our prosperity. “Global Britain” has become less open. It is lagging behind.

Leaving the EU also meant changes to the rules on the free movement of labor and the introduction of a points-based immigration system. The chief executive of fashion chain Next, Lord Wolfson and Wetherspoons’ boss Tim Martin both supported Brexit — but both have called for the U.K. to let in more workers.

A study by the think tanks Centre for European Reform and U.K. in a Changing Europe suggests that there are 330,000 fewer workers in the U.K. as a result of Brexit. That may only be 1% of the total workforce, but sectors such as transport, hospitality and retail have been particularly hard hit.

Meanwhile, in the financial services sector, 7,000 jobs may have been lost, according to a House of Commons report, but that’s far fewer than the 70,000 previously feared.

The U.K. is the only major rich economy that remains smaller — poorer — than prior to the pandemic and Brexit may be a factor.

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