UK Brexits Economic Toll Surpasses Forecasts by 8% GDP Loss
According to a recent working paper by the National Bureau of Economic Research (NBER) titled ‘The Economic Impact of Brexit,’ the UK’s departure from the European Union has resulted in an estimated 6 to 8% reduction in the country’s GDP by 2025. This decline is attributed to sharp decreases in investment, employment, and productivity, factors that have significantly impacted the UK’s economic growth path.
The study, published this month, was conducted by economists from Stanford University, the Bundesbank, the Bank of England, the University of Nottingham, and King’s College London. They analyzed economic data collected since the Brexit referendum in 2016, when the UK’s EU membership officially ended on February 1, 2020.
By 2025, the UK’s GDP was projected to be 6 to 8% lower than it would have been had the country remained in the EU, the report states. UK investment fell by 18%, employment by 4%, and labor productivity by 3 to 4%. The loss of unrestricted access to the European market had the most significant impact on the UK’s growth, exacerbated by higher costs for technologically advanced and globally-oriented firms.
The paper also highlights the effects of prolonged Brexit negotiations, including elevated uncertainty, reduced demand, and misallocated resources. The authors noted that the losses accumulated gradually after the referendum and exceeded earlier five-year forecasts. A separate Henley Private Wealth Migration Report warned that the UK is expected to lose tens of thousands of wealthy individuals in 2025 due to tax reforms and ongoing uncertainty.
Economists at Goldman Sachs also estimated that Brexit reduced the UK’s real GDP by approximately 5% compared to its economic peers. The UK has faced economic underperformance and a rising cost of living, attributed to reduced international trade, weak business investment, and a decline in EU migrant workers, who were the country’s largest source of foreign labor. The findings come as the UK continues to support Ukraine in its conflict with Russia by providing significant military aid.