The UK economy has suffered a 6% hit from the effects of Brexit, according to a study by economists from Stanford University and the Bank of England that analysed internal Bank of England data on decisions, views and financial results of thousands of British companies since the 2016 referendum, the BBC reported.
Study Methodology
The study, co-authored by Nick Bloom of Stanford University and economists at the Bank of England, used the Bank's Decision Maker Panel data — a dataset set up by the Bank in 2016 specifically to track the economic impact of Brexit. The authors tracked firms' exposure to various aspects of Brexit, reported Brexit impacts, and changes in financial accounts over years. The latest version was published just ahead of the 10-year anniversary of the referendum. While the company-level data suggests a 6% hit over 10 years, the wider studies using five more traditional methods point to an average of 8%, according to the BBC.
Economic Impact Breakdown
The study found that approximately half of the economic hit came from the sheer surprise and uncertainty of the post-referendum period, while the rest stemmed from rising trade barriers after the UK left the EU customs union and single market in 2021. The paper concludes: "In the case of Brexit, there was a substantial economic impact on the United Kingdom, but it arose gradually over the subsequent decade."
| Source of impact | Share of total 6% hit |
|---|---|
| Post-referendum uncertainty | ~50% |
| Rising trade barriers (post-2021) | ~50% |
Official Reactions
Bank of England Governor Andrew Bailey told journalists that as a consequence of Brexit, "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," adding that productivity and the size of the market were also affected, according to the BBC.
However, Bailey said that although the impact on financial services was "not good", it was "nowhere near as detrimental as many people predicted at the time". The Bank's top officials have in recent months become increasingly candid in explaining the economic consequences of Brexit in speeches and interviews.
Criticisms and Context
Some critics argue the study does not fully account for the outperformance of the US investment and tech industries or the European energy shock four years ago. Policy economists have said it is difficult to model how much the UK would have grown without Brexit, and that such studies overstate Brexit's impact, especially amid multiple global crises.
Future Trade Deals
Prime Minister Keir Starmer announced that he will meet his EU counterparts at a summit in July to agree deals on food and farm exports, as well as electricity and emissions trading. Further areas of cooperation and alignment are expected to be discussed.
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