Between the effects of the Covid-19 pandemic and the effects of the energy crisis, it is difficult to calculate the direct impact of Brexit on the UK economy since January 2021. To the point that it sparked several debates among economists. But if the numbers are debated, there is nevertheless a consensus: leaving the EU has significantly worsened the UK’s economic performance.
In an article published on 21 December, the Center for European Reform (CER) estimated that UK GDP in the second quarter of 2022 was 5.5% lower than it would have been had the country remained in the EU. According to the Financial Times, such a trend would represent an annual loss of more than 100 billion pounds sterling to the British public finances.
The depreciation of the pound
In addition, a direct economic consequence of Brexit crystallizes in particular the attention and creates consensus: the depreciation of the British pound by more than 10% after 2016, which continues until today. This fall significantly increased the price of imports, costs for businesses and inflation, but failed to boost wages or the competitiveness of the UK economy. As a result, real wages fell by 2.9%, generating a loss of £870 a year on average for UK households, fueling strong discontent.
Finally, the departure from the EU has compromised certain structures of the British economy. Heavily dependent on its natural gas imports, Britain no longer benefits from the EU’s collective bargaining power and is preparing to suffer an even bigger gas price rise than its European neighbours.
It has also been weakened in terms of international trade by leaving the trade deals the EU is engaged in. In return, the free trade deal signed with Australia in December 2021 should only increase UK output by 0.08%.
Renegotiate with the EU? “None! “
From there to questioning Brexit? Prime Minister Rishi Sunak, an early supporter of “Leave”, signaled the end of the game. “Let me be clear about this. Under my leadership, Britain will not seek any relationship with Europe based on alignment with EU law,” he said on November 25.