As we approach the 10-year anniversary of the Brexit referendum, it's time to reflect on the economic reality that Britain now faces. The consequences of this historic decision have been far-reaching and, in my opinion, more detrimental than many initially anticipated.
The immediate aftermath of Brexit saw a wild swing in the value of the British pound, which plummeted by a staggering 10% on the day of the referendum results. This collapse had a ripple effect, driving up import costs and triggering an inflationary shock that impacted households and the public finances. The pound has never fully recovered, leaving British travelers feeling the pinch.
One of the most striking aspects of Brexit's economic impact is the slowdown in UK growth. Leading economists, like Nick Bloom, have analyzed the data and concluded that the UK's GDP per capita is now 6-8% lower than it would have been without Brexit. This gap in output, which opened up post-2016, is a clear indicator of the economic stagnation that has followed.
Brexit's impact on trade has been equally concerning. The erection of trade barriers has hit goods exports hard, particularly to the EU, which remains the UK's largest trading partner. The uncertainty surrounding Brexit, and the ever-changing rules, has made it difficult for businesses to adapt, leading to a decline in investment and productivity. As Bloom puts it, it's like a shop moving to the outskirts of town, making it harder for customers to reach and creating an uncertain environment.
The uncertainty surrounding Brexit also took a toll on employment. While unemployment initially fell post-referendum, it has since risen sharply, particularly among young people. The number of 16-24-year-olds not in education, employment, or training (NEET) has reached over a million, the highest level since 2013. This is a worrying trend that highlights the broader challenges facing the UK's labor market.
Public support for Brexit has also waned over the years. Recent polling shows that a majority of Britons now favor a closer relationship with the EU, with many even supporting rejoining the bloc outright. This shift in public opinion suggests that the initial enthusiasm for Brexit has given way to a more realistic assessment of its economic consequences.
In conclusion, the economic impact of Brexit has been profound and, in many ways, more severe than initially predicted. The data paints a clear picture of a country that is poorer, with slower growth, reduced trade, and a struggling labor market. As we reflect on the past decade, it's important to consider the broader implications of such a significant political decision and the long-term consequences it has had on Britain's economic landscape.
