According to a BBC report, the UK economy has taken a 6% hit from the effects of Brexit, based on economists' analysis of internal Bank of England data on thousands of British companies since the 2016 referendum. The study, co-authored by Stanford professor Nick Bloom and Bank of England economists, used the Bank's Decision Maker Panel data—normally used for interest rate decisions—to reconstruct how the UK would have grown without leaving the EU.
Economic Impact Quantified
The study found that about half the economic hit came from the surprise and uncertainty of the post-referendum period, while the rest stemmed from rising trade barriers after the UK left the customs union and single market in 2021. The company-level data points to a 6% GDP reduction over 10 years, while five more traditional analysis methods yield an average of 8%, according to the report.
Bloom told the BBC that the UK was growing fast before Brexit and could have at least partially kept up with the US without the disruption. He argued the Bank of England data provided important corroboration.
"In the case of Brexit, there was a substantial economic impact on the United Kingdom, but it arose gradually over the subsequent decade." — Study co-author Nick Bloom
Official Reactions
Bank of England Governor Andrew Bailey recently stated the economic consequences of Brexit candidly. According to the BBC, Bailey told journalists:
"I think the level of activity and growth in the economy has been lower. And the reason for that is that if you reduce the size of the markets that we trade with, so we reduce our export markets, then that does tend to have a negative impact on growth."
Bailey added that productivity and market size were also affected. However, he noted that the impact on financial services was "nowhere near as detrimental as many people predicted at the time."
Methodology and Criticisms
The Decision Maker Panel was set up by the Bank of England in 2016 specifically to track Brexit's economic impact. The study used years of survey answers to measure firms' exposure to Brexit and changes in financial accounts. Some policy economists argue that modeling growth without Brexit is difficult and that such studies may overstate Brexit's impact given global crises.
The paper includes a disclaimer that the views expressed do not necessarily represent those of the Bank of England.
Political Developments
Prime Minister Keir Starmer announced he will meet EU counterparts at a summit in July to agree on deals covering food and farm exports, as well as electricity and emissions trading. Further cooperation and alignment areas are expected, according to the BBC.
Summary of Key Findings
| Metric | Company Data | Wider Studies Average |
|---|---|---|
| GDP hit over 10 years | 6% | 8% |
| Attribution: Post-referendum uncertainty | ~50% | — |
| Attribution: Trade barriers post-2021 | ~50% | — |
The study is published ahead of the 10-year anniversary of the 2016 referendum, highlighting the long-term and gradual nature of Brexit's economic impact on the UK.
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