The UK economy has suffered a significant 6% hit to its growth since the Brexit referendum, according to an exhaustive analysis of internal Bank of England data. The study, co-authored by Professor Nick Bloom of Stanford University and economists at the Bank of England, utilises the Bank's Decision Maker Panel (DMP) data to gauge the economic impact of the UK's departure from the EU.
The research suggests that roughly half of this economic downturn resulted from the initial shockwave caused by the 2016 referendum decision. The remaining 50% is attributed to the rise in trade barriers post-2021, impacting productivity and market access for British businesses. These findings are backed by the Bank of England's extensive company data.
Professor Bloom notes that the UK economy was on a strong growth trajectory before Brexit, mirroring the pace seen in the US. However, the disruption caused by the decision has resulted in a significant deviation from this trend. The paper concludes that the economic impact of Brexit has been substantial but manifested gradually over the decade since the referendum.
Senior Bank of England officials have consistently highlighted the economic consequences of Brexit. Governor Andrew Bailey has stated that the level of activity and growth in the economy has been lower due to reduced market access and diminished export opportunities. While acknowledging the negative impact on financial services, he notes that it was less severe than anticipated.
The study's methodology combines company-level data with traditional analytical approaches, providing a comprehensive view. The DMP data indicates a 6% hit over ten years, while broader studies suggest an average impact closer to 8%. However, critics argue that such studies may not fully account for external factors like the outperformance of US investment and tech sectors or the European energy shock.
As the tenth anniversary of the Brexit referendum approaches, Prime Minister Keir Starmer is set to meet with EU counterparts in July to discuss potential agreements on food and farm exports, electricity, and emissions trading. Further discussions are expected on broader cooperation and trade arrangements between the UK and the EU.