Brexit has turned out to be a complete economic failure, according to a new study by the US National Bureau of Economic Research
Brexit turned out to be a complete economic failure. And the numbers are hard to ignore. A new study by the National Bureau of Economic Research in the US shows that the decision to leave the European Union reduced the GDP of Great Britain by up to 8%, writes The Telegraph.
In the Office for Budget Responsibility's latest forecasts, Brexit looms like an unsettling shadow. It's not named directly, it's not explained, it almost doesn't appear — just two passing mentions in a nearly 200-page report. And yet it's there, in the background, responsible for much of the stagnation grinding the British economy.
The political class avoids the subject. The only one who brings it up bluntly is Liberal Democrat leader Ed Davey. Labor prefers to walk the talk — they don't want to irritate their voters who voted to leave the EU. Even though some of them have begun to feel the consequences, few are willing to hear that they may have been wrong. Especially when their motivations were rather identity-based—sovereignty, control, immigration—and not economic.
The current government would actually like to close this chapter. Not to reopen wounds, not to lose energy in a debate that has divided the country. But economic reality doesn't disappear just because we avoid talking about it. And the studies that analyze the effects of leaving the EU are increasingly clear: the economic impact is negative and consistent.
The toughest estimates yet
The most recent of them—the NBER analysis—comes with the harshest estimates yet: investment would be 12–18% lower than in the scenario where the UK remained in the EU, employment 3–4% below potential, and productivity affected by the same proportion. The researchers point out that it is not just trade that is the problem. Uncertainty, falling demand, wasted managerial time and diversion of resources in the interminable Brexit process weighed heavily.
Of course, any counterfactual is hard to prove. And yes, the pandemic and the energy crisis have completely distorted the economic picture. But even so, the main message remains: leaving the EU has cost dearly.
The British economy is, admittedly, 7.6% bigger than in 2016 — but that doesn't change the bottom line. Many European countries performed similarly or worse, but NBER estimates suggest that without Brexit, Britain's growth rate would have been considerably better. The figures may seem hard to believe, but the general direction is also confirmed by the micro-level analysis of British companies, where the negative effects are much more visible.
Hypothetical advantages
And if a defense of Brexit is sought, the argument remains that the promised economic opportunities have not been exploited. Regulations can be adjusted, and certain sectors — such as artificial intelligence — could benefit from more flexible legislation. But so far these advantages are rather hypothetical.
Instead, the problems are concrete. The coalition that backed Brexit was a fragile one anyway — pro-market liberals, anti-immigrants and protectionists, all with fundamentally different goals. As expected, neither of these camps got what they wanted. Regulations have not eased, taxes have risen and immigration has reached record levels under British control.
Even the trade agreements promised as a great success did not deliver significant results. Even the Government admits that their impact on economic growth in the medium term is negligible.
In the end, Brexit, which was supposed to be a moment of “economic revival”, produced the opposite. Productivity remains low, growth prospects are modest, and the efforts of the current government—one surprisingly close in economic philosophy to the European model—seem to confirm that the circle has ironically closed: the United Kingdom is getting, economically and fiscally, ever closer to the Europe it tried to leave.
