The decision to leave the European Union has undoubtedly delivered greater political freedoms. The UK has been able to enact immigration reforms and a speedy vaccine rollout during the Covid-19 pandemic.
The economic benefits are far harder to identity, indeed the economic damage Brexit has caused is becoming clearer. The Centre for European Reform (CER) has modelled the economic performance of a UK that remained in the EU – using data from countries like the US, Germany, New Zealand, Norway and Australia – whose performance was similar to ours before Brexit.
It then compared this with the real performance of the UK economy since the referendum six years ago. The CER concludes that by the end of last year our economy was 5.2%, or £31 billion, smaller than it would have been had we stayed in the EU.
Investment by businesses and government was 13.7% lower; goods trade 13.6% lower; although services trade was 7.9% higher. “Disentangling the economic effects of Brexit and Covid-19 is difficult. But now that most advanced economies have surpassed their pre-pandemic level of output, we have a basis of comparison for the UK economy,” says John Springford, Deputy Director at the CER.
Springford argues that a sizeable gap between the UK and his “doppelgänger” economy had opened up before the pandemic struck and that by the end of 2021 most economies had reopened and the worst of the pandemic has passed.
“The UK lifted its restrictions about six weeks earlier than a lot of European countries that I compare the UK to and it had a much more successful vaccination drive, you would expect [UK GDP] to have recovered faster but it’s is still quite a lot down”. The CER’s analysis shows that Brexit has cost the UK billions of pounds in lost trade, lost investment and lost tax revenues. That’s money the country could really do with at a time of rising national debt and falling living standards.
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