New analysis claims that Brexit will leave a gap of nearly £100bn for UK exports each year, which would make Britain’s economy worse than if they stayed in the European Union.
The UK’s decision not to remain in the EU has led to a 30 percent decrease in trade between 2020-2023 compared to if Britain remained within the trading bloc.
The analysis shows that since leaving the single market Britain’s exports have lagged behind those of other advanced economies. This has led to a missed growth in services and goods exports by around £23bn per quarter.
John Springford, associate fellow at CER, a pro EU think tank, stated that his analysis “shows Brexit is leading to a permanent depression in trade between the UK & EU”.
He said that if Brexit had not happened and we could visit an alternate universe in which Remain had won the referendum then trade and the economy would have been significantly higher.
Mr Springford rejected arguments by Brexiteers that trade deals with countries outside the EU could compensate for the economic shortfall.
He said that the argument “violates one of few absolute certainty we have in international economy, which is trade with nearby large countries will always be larger than trade with distant small economies.”
Thomas Sampson is an economist and associate professor at London School of Economics. He said that Brexit was a drag on the economy. Mr Springford, he described as a respected analyst. Mr Sampson stated that although there were nuanced ways to interpret the figures, “you cannot question the quality of the work”.
The data confirms the arguments of other economists who claim that leaving the EU has hurt the UK’s financial well-being , and that it did not release the £350m per week that Boris Johnson promised and that the Leave campaign had pledged for the NHS.
The most pessimistic predictions, that Brexit would cause an economic catastrophe and leave Britons with a limited food supply, have not been realized.
Conservative ministers, regardless of whether they support Brexit or Remain, have refused to acknowledge that Brexit has hurt Britain’s economy. We have heard from a number of independent experts about the impact Brexit will have on Britain’s economy.
The latest study is the most bleak. Last month, economists at Cambridge Econometrics found that Brexit had already caused the UK economy to lose PS140bn in lost growth compared to what it would have been if the UK chose to remain in the single market and customs union.
They also calculated that the UK would be £311bn poorer by 2035 if they looked at growth through the lens of gross value addition (GVA), the total value of goods, services and other products.
Bloomberg Economics experts estimated that Brexit costs the UK economy £100bn per year. The group estimated the gross domestic product to be 4 percent lower than it could have been.
Mr Sampson claims that Brexit costs the UK between £75bn to £125bn per year, which is equivalent to 3 per cent and 5 per cent GDP.
He said, “It is pretty obvious that UK growth slowed down after the referendum.” “Brexit is a drag on the economy that has been building up over time.”
The economist said: “Covid, the Ukraine war, and the comparisons between the UK economy and other economies show that there is a continuing impact.” The gap between our current growth and what we could have achieved has slowly grown over time.
Experts say that Brexit has harmed the already low levels of foreign investment in Brexit.
The Centre for European Reform’s 2022 study found that Brexit cost the UK £33bn in lost trade, investment and tax revenues. The think tank discovered that the UK’s investment fell by 13.7% when compared to similar economies in a group called “doppelgangers” over just one quarter.
According to a recent Cambridge Econometrics report, Britain’s investment will be 32 percent lower by the middle next decade without Brexit.
Economists say that Brexit is also affecting wages and jobs. According to the Cambridge Econometrics report, Brexit Britain will have 3 million fewer job opportunities by 2035 compared to if it stayed in the EU.
The Resolution Foundation and LSE think tanks released a damning report in 2022 that found the real wages of an average worker would be £470 less per year if Britain remained within the EU.
The process, they said, would make the country “poorer”, during the 2020s.
The extra costs and inconvenience for UK companies trying to export goods into the EU has been one of the most noticeable impacts of Brexit. The new import controls – which will be implemented in waves between April and October – are expected to worsen the situation.
Post-Brexit paperwork and checks have caused repeated disruptions at the Port of Dover. Last year, some supermarkets had to ration certain fruits and vegetables to cope with shortages.
The CER study, which compared Brexit Britain to “doppelganger economies”, found that the overall trade of goods in Britain was 7 percent lower due to its EU exit.
This is in line with the 2022 Resolution Foundation report which showed a 8% drop in “trade openness”, i.e. trade as a percentage of economic output, since Brexit.
Kemi Badenoch , the Brexiteer Business Secretary, said last week that Brexit is “going well”, and the government “is working through” problems.
Ms Badenoch emphasized that the figures showed British Exports to the EU increased by 2022. This is only a rebound after the post-Brexit crash in 2020 and 2021.
Top economists said that it is unclear whether British companies will be able to recover from red tape over time. He said that Brexit would continue to drag the economy. “Businesses can adjust to the additional costs, but we could be cut off from some supply chains,” he said.
All the Brexit redtape has increased food prices. According to a study by the LSE, British households paid nearly £7bn in order to cover the costs of increased bureaucracy.
According to the LSE’s Centre for Economic Performance, leaving the single market and the customs union has increased the average household food cost by £250 since Brexit. Food inflation has risen by 25% since 2019 but only 17% if Britain stayed in the EU.
The energy shock that followed the invasion of Ukraine has had a greater impact on the economy than Brexit. However, the UK’s departure has still had an effect on supermarket prices.
Huw Pill, the Bank of England’s Chief Economist, stated in 2022, that Brexit is one of the factors for UK’s high inflation levels.
This helps to explain why Paul Johnson (head of the respected Institute for Fiscal Studies, IFS) said the same year Brexit was “very obviously an economic own-goal”.
Food sector groups are calling on the government for a new veterinary agreement with the EU in order to align safety and health standards.
Polling shows that the majority of Britons are not only convinced Brexit will not improve the economy but also accept it. He said that there is a consensus among voters about the failure of Brexit, but that they also don’t wish to revisit the entire process.
Matt Lesh is the director of public policy, communications and media at the Institute of Economic Affairs, a think-tank that promotes free markets. He maintains that Brexit, despite its disruptions, remains a great opportunity for the UK.
He said that Brexit will only be judged on the long-term, based on whether the UK is able to take advantage of these opportunities. It’s true that leaving the EU can cause some disruption, but some of it has been exaggerated.
Mr Lesh said that Brexit costs “have always be exaggerated”. The success of Britain leaving the EU will depend on the UK’s ability to improve trade relations with the rest of the world.
The second thing that Mr Lesh says the UK government hasn’t “advanced much in” is the possibility of diverging from EU regulations on specific issues that would be beneficial to the UK economy.
The Department for Business and Trade cited the success of the Brexit 4th Anniversary Paper as proof that the government is delivering on the promises associated with Britain’s departure from the EU.
Ms Badenoch stated: “The statistics, and the successes that are contained in the pages of the ‘Brexit Fourth Anniversary’ book tell a powerful tale – of an international Britain that is flourishing on the global stage. Many predicted that Britain would decline when we left the European Union. They have all been proven false.
“My department uses our post-Brexit liberties to make the UK one of the best places in the world for starting and growing a business. We’re removing 500 barriers to trade so far. This would have meant removing trade barriers of around £1m per hour by 2023.
The British people’s belief that we would be masters of our destiny has paid off. Now, my mission and the mission of my department is to build on these successes. To loudly and confidently champion free markets and free trade as the best path to economic prosperity.