How much has Brexit cost the British economy? Ten years after the referendum the question is still at the heart of political debate. The answer is not simple, because departure overlapped with the pandemic, the 2022 energy crisis, the surge in inflation and, in 2026, a new energy price shock linked to the war in the Middle East. Economists agree on one point, however: the net effect is negative, and larger than many Leave supporters expected.
The main estimates
- Office for Budget Responsibility (OBR): the independent body that produces the official forecasts for the Treasury has assumed since 2016 that in the long run Brexit reduces productivity by 4% and trade intensity by 15% compared with remaining in the Union.
- Academic studies: comparing the UK with a group of similar countries (a "synthetic twin"), several researchers estimate that by 2025 GDP was between 4% and 8% lower than it would have been inside the EU.
- Investment: business investment, which was growing before 2016, stayed almost flat for three years after the vote, held back by uncertainty over the future trade deal.
Sterling and prices
The most immediate effect was on the currency markets. Before the referendum a pound was worth about €1.30 and $1.48; the day after the vote it lost about 8% against the dollar, and in the following years it settled at noticeably lower levels, generally fluctuating between €1.10 and €1.20. A weaker currency makes imports dearer: according to the London School of Economics' Centre for Economic Performance, the trade barriers introduced with Brexit pushed up food prices by about 8% between 2019 and 2023, a cost borne mainly by low-income households, who spend a larger share of their budget on food.
The labour market
The end of free movement created staff shortages in sectors that depended on European workers: farming, restaurants, hotels, logistics and care. In summer 2021 a lack of lorry drivers emptied some shelves and left a number of petrol stations dry. Businesses partly made up for it by hiring non-European workers through the new points-based system, but hiring costs rose, especially for small firms that have to pay for visas and levies.
The City of London
Feared to face a mass exodus, the City held up better than expected. Some banks moved staff and activities to Dublin, Frankfurt, Paris and Amsterdam to keep serving European clients, and in 2021 Amsterdam briefly overtook London in share trading. But London remains by far Europe's leading financial centre for currencies, derivatives, insurance and asset management. The loss of the EU "passport" has, however, slowed the sector's growth.
The opportunities claimed
Leave supporters point to the autonomy gained: the freedom to sign its own trade deals (with Australia, New Zealand, India and membership of CPTPP, the Asia-Pacific trade bloc), the reform of farm subsidies, freeports, its own rules on artificial intelligence and financial services, and the abolition of VAT on some products. These measures have real effects but, according to the government's own assessments, much smaller than the losses in trade with Europe: the Australia deal, for example, is worth about 0.1% of GDP in the long run.
What now?
The "reset" begun in 2025 aims to reduce friction without rejoining the single market: a veterinary agreement would remove most checks on food and farm products, while linking the emissions markets would spare British firms the EU's carbon border tax. Government estimates point to benefits of a few tens of billions of pounds in the long run, useful but not enough to cancel the costs of leaving. For the effects on trade see trade and customs; for the wider picture, the UK economy and the Brexit special.