A new analysis of internal Bank of England data says Brexit reduced the size of the UK economy by 6% over the past decade. The study, based on information the central bank uses to assess thousands of British companies and guide interest-rate decisions, examined how much growth Britain lost since the 2016 referendum on leaving the European Union.
Researchers said about half of the damage came from the initial shock and uncertainty after the vote, while the rest resulted from trade barriers that emerged after Britain effectively left the EU single market in 2021. The paper’s conclusion stated that Brexit had a substantial economic effect on the United Kingdom, with the impact building gradually over the decade that followed.
The findings come after several recent interviews and remarks by Bank of England officials about Brexit’s economic consequences. Governor Andrew Bailey recently told reporters that, because of Brexit, “the level of activity and growth in the British economy has never been lower.” He said reducing the number of markets Britain trades with also shrinks export markets, which hurts growth, and added that manufacturing and market size were affected too. Bailey also said the hit to financial services “was not good, but it was not comparable to the damage many predicted at the time.”
The research has also drawn criticism. Some economists argue it does not fully account for stronger US investment and technology sectors or for Europe’s energy shortages four years ago. One author of the study, Stanford professor Nick Bloom, said Britain was growing quickly before Brexit and could have at least partly kept pace with US growth without the disruption, adding that the Bank of England’s company data provides important confirmation.
