By Brexit Carnage editorial staff
The UK’s exit from the EU is a “self-inflicted wound” costing every Briton about £1,750 a year five years after Brexit, a report says.
UK gross domestic product is estimated to be 4.3% smaller than it would have been if the nation had not left the EU, the study by Dutch investment bank Rabobank said.
“That’s some price to pay,” Rabobank senior macro-economic strategist Stefan Koopman said: “The UK’s economic struggles are largely rooted in weak investment, weak productivity growth and increased household savings. While Brexit is not the sole cause, it has undeniably exacerbated the UK’s [difficulties].”
While Brexit officially took place nearly five years ago, on 31 January 2020, the economic uncertainty it caused began even earlier, in June 2016, when the referendum set the UK’s departure from the EU in motion, Rabobank says.
It is often cited as one of the three main factors behind the UK’s weak economic performance, alongside the post-pandemic spike in the price of imported goods and the energy crisis. Of those three, Brexit stands out as the self-inflicted wound, Rabobank said.
“It is abundantly clear that UK economic growth has disappointed since Brexit. The UK’s GDP has grown less than 3% since the fourth quarter of 2019,” Koopman said.
The 4.3% reduction in GDP over eight years estimated in a continental Europe-focused comparison equates to an annual growth shortfall of approximately 0.5 percentage points, Rabobank said.
“While this figure may seem politically debatable in the short term, it is significant enough to become unignorable over time,” Koopman said. “Although estimates like these should be interpreted with caution, the implications are not merely academic.
“The UK’s sluggish economic performance isn’t just a statistical curiosity. It’s evident in weak investment, stagnant productivity, declining consumer confidence and slow income growth. In that sense, Brexit is not merely a one-off shock but rather one of several chronic economic challenges that undermines the UK’s long-term potential.”
The report comes as the new Labour government faces increasing market concerns over its management of the economy, with UK bond yields this week topping levels not reached since Liz Truss’s widely criticised mini-budget in 2022.