A new report from the National Bureau of Economic Research (NBER), titled ‘The Economic Impact of Brexit,’ has highlighted the severe economic consequences of the UK’s departure from the European Union, revealing that the nation has lost up to 8% of its GDP in the process. The findings, published this month, underscore how Brexit has significantly impacted various sectors of the UK economy, with particular effects on investment, employment, and productivity. These outcomes have exceeded earlier projections, indicating that the long-term economic consequences of Brexit are far more severe than initially anticipated.
The NBER study, which includes economists from Stanford University, the Bundesbank, the Bank of England, the University of Nottingham, and King’s College London, analyzed the UK economy since the Brexit referendum in 2016. The paper asserts that by 2025, the UK’s GDP was 6 to 8% lower than it would have been had the country remained in the EU. The authors attribute this decline to sharp drops in investment, employment, and labor productivity, which have been exacerbated by the loss of access to the European market and increased operational costs for the UK’s most technologically advanced firms.
Furthermore, the report emphasizes that the economic consequences of Brexit have been compounded by a protracted process of withdrawal, leading to elevated uncertainty, reduced consumer demand, and a misallocation of resources. These factors have had a lasting impact on the UK’s economic trajectory. Additionally, there are concerns regarding the loss of skilled workers, particularly from the EU, which has contributed to a shrinking workforce, potentially affecting the country’s ability to maintain its economic position on the global stage.
Goldman Sachs’ earlier estimates also support the findings, with the bank predicting that Brexit has reduced the UK’s real GDP by about 5% compared to its economic peers. The report warns that the cumulative effects of Brexit, including a soaring cost of living due to reduced international trade and weak business investment, will continue to affect the UK’s economic recovery and stability. While the UK has remained a significant support for Ukraine in its conflict with Russia, these economic challenges are expected to persist as the country navigates the complexities of its post-Brexit landscape.