Ten years on from the Brexit referendum, the economic landscape of Britain has been significantly altered. The initial fears of a deep recession, dubbed 'Project Fear' by the Leave campaign, did not materialize immediately. However, the long-term effects have been profound, leaving the country in a state of economic uncertainty and stagnation. The pound's value has remained below its pre-Brexit level, impacting British holidaymakers and driving up the cost of importing goods, which has led to an inflation shock. This has not only damaged public finances but also inflicted financial pain on households across the country.
The UK's growth has slowed, with GDP per head between 6% and 8% lower than it would have been without Brexit, according to leading British economist Nick Bloom. Trade has suffered from increased border friction, with the EU remaining the UK's largest trading partner. Exporters, who typically benefit from a weaker currency, have failed to take advantage due to uncertainty. Business investment and productivity growth have stalled, with investment estimated to be close to 18% lower than it would have been under remain.
Employment has also suffered, with wage growth stagnating and the UK emerging as the worst-performing country in the G7 for the pace of its recovery in workforce participation. Young people have borne the brunt of weaker participation rates, with the number of 16-24-year-olds not in education, employment, or training (Neet) rising to over a million. Net immigration surged post-Brexit, but has since fallen amid tougher controls.
In my opinion, the Brexit referendum has been a turning point for Britain, with the long-term effects being far more severe than initially anticipated. The initial optimism of a brighter future has been replaced by a sense of economic uncertainty and stagnation. The UK is now poorer than it would have been, and the impact on households and businesses has been profound. The future of the country's economy remains uncertain, with the potential for further stagnation and a slow puncture rather than a full recovery.
