Brexit's Impact: A Decade Later
The Brexit referendum, a pivotal moment in British history, has left an indelible mark on the nation's economy, society, and political landscape. As we reflect on the 10th anniversary, it's clear that the decision to leave the European Union has had profound and multifaceted consequences.
The Economic Reality
The economic implications of Brexit are stark and multifaceted. The initial recession fears, dubbed 'Project Fear' by the Leave campaign, did not materialize in the immediate aftermath. However, the long-term forecasts were prescient. The economy is significantly smaller than it would have been had Britain remained in the EU. The pound's dramatic plunge post-referendum, from $1.50 to $1.34 against the dollar, and from €1.31 to €1.15 against the euro, illustrates the financial impact. This depreciation drove up import costs, triggering an inflation shock that damaged public finances and burdened households.
The Treasury's forecasts, reviewed by former Bank of England deputy governor Charlie Bean, were largely accurate. He acknowledges that the immediate post-referendum world didn't plunge into recession, but the long-term assessment was spot on. "We're poorer than we otherwise would have been," he stated.
Trade and Friction
Brexit's trade barriers have significantly impacted goods exports. The EU remains Britain's largest trading partner, with exports to the bloc worth £385 billion in 2025 (41% of total UK exports) and imports £474 billion (49%). Since the end of the EU transition period, UK goods exports have slowed relative to the G7, while service exports have held up better. This disparity is attributed to the UK-EU trade agreement, which created more friction for goods than services.
The situation is akin to a shop moving to the outskirts of town, making it harder for customers to access. This uncertainty has stifled business investment, with investment estimated to be 18% lower than it would have been under a 'remain' scenario, and productivity 4% lower.
Employment and Participation
Brexit's impact on employment is complex. Initially, unemployment fell to record lows, but this masked underlying challenges. Wage growth stagnated, with real wages barely increasing until the pandemic. Britain emerged as the worst-performing G7 country in workforce participation recovery post-pandemic, with rising ill-health contributing to economic inactivity.
Young people have borne the brunt of weaker participation rates, with over a million 16-24-year-olds not in education, employment, or training (NEET). Employment is estimated to be 3-4% lower than it would have been under a 'remain' scenario.
Public Opinion and Support
Public support for Brexit has waned significantly. Polling shows a majority now favors a closer relationship with the EU without rejoining the bloc. Over two-thirds believe looser ties would be a mistake, and a majority would back rejoining the EU outright. Support is strongest among Green and Labour voters, while Reform UK supporters are most opposed to rejoining.
Migration and Labor Shortages
Net migration surged post-Brexit, reaching a record high of nearly 1 million in the year to June 2023, driven by the war in Ukraine and pent-up demand. However, net migration has since fallen, dropping to 171,000 last year, as tougher migration controls were introduced and tightened.
Employers have struggled with staff shortages, particularly in construction, hospitality, and manufacturing, due to the loss of readily available EU workers.
Conclusion: A Complex Legacy
Brexit's legacy is complex and multifaceted. While some aspects, like the pound's depreciation and trade friction, are tangible and measurable, others, such as the impact on employment and public opinion, are more nuanced. The economic costs are clear, but the social and political ramifications are still being unraveled. As Britain navigates this post-Brexit reality, the lessons learned from this decade will shape its future relationship with Europe and its own identity.
