As the 10th anniversary of the Brexit vote approaches, the verdict on Britain’s economic performance is clear: voting to leave has resulted in severe costs for households and businesses.
The immediate recession predicted in the Treasury forecasts ordered by George Osborne – dubbed “project fear” by the Leave campaign – did not happen. The impact from the Covid pandemic, wars in Ukraine and Iran, and Donald Trump’s trade battles also cloud the picture.
But experts agree the long-term forecasters were on the money: the economy is significantly smaller than it would otherwise have been, trade has suffered, business investment and productivity growth have stalled, and families are on average thousands of pounds a year worse off.
Charlie Bean, a former Bank of England deputy governor, who reviewed the Treasury forecasts, said: “Osborne has a lot to answer for when he was basically saying, ‘Treasury analysis shows – look, there is going to be a deep recession tomorrow.’
“That was really misrepresenting what you could take from [it] and overselling it, obviously to try and win the argument politically. In hindsight, we had the vote and the world didn’t fall off the cliff immediately, and so the Brexiters can say [it] wasn’t worth the paper it was written on.
“But the assessment of the broad long-run was in the right ballpark. We’re poorer than we otherwise would have been.”
Here are the charts highlighting the economic consequences.
double quotation markIn hindsight, we had the vote and the world didn’t fall off the cliff immediately, and so the Brexiters can say the Treasury analysis wasn’t worth the paper it was written onCharlie Bean
The pound is below its pre-EU referendum level
The value of the pound swung wildly after the polls closed on 23 June 2016. As Nigel Farage appeared ready to concede defeat, the currency gained. But early leave victories in key locations, including Sunderland, prompted a 10% plunge in the pound on what was its biggest ever one-day fall.
The collapse in the pound drove up the cost of importing goods, triggering an inflation shock that damaged the public finances and inflicted financial pain on households across the country.
chart
Exporters – who typically benefit from a weaker currency because their products become cheaper for overseas buyers – failed to take advantage as uncertainty clouded trade appetite.
A decade later, the pound has never returned above its pre-Brexit level, hitting British holidaymakers in the pocket. From close to $1.50 against the dollar and €1.31 against the euro just after polling closed, the pound stands at $1.34 and €1.15.
UK growth has slowed
There are reasons why the Brexit recession never materialised: mostly because the Treasury forecast assumed an immediate no-deal departure, rather than continued EU membership until 31 January 2020 – before an 11-month transition period and other deals since.
According to the Office for Budget Responsibility, the independent Treasury watchdog, the UK is on track to suffer a 4% hit to national income over a 15-year period.
At the decade mark, analysis by Nick Bloom, a leading British economist at Stanford university in the US, and others in a research paper for the US National Bureau of Economic Research, show that UK GDP per head is between 6% and 8% lower than it would have been without Brexit.
chart
Based on performance relative to 33 other advanced economies, the analysis shows that Britain roughly tracked these countries closely until 2016, before a large gap in output opened up.
“The statistics are really clear: the UK has grown more slowly after Brexit than before,” Bloom said. “Is it because of Brexit? Probably. You can’t be absolutely certain, but I don’t see anything else that would open up this gap with the UK and everyone else.”
Trade has suffered from more border friction
Brexit involved erecting trade barriers, which has hit goods exports. The EU is still the UK’s largest trading partner: in 2025, exports to the bloc were worth £385bn (41% of all UK exports) and imports £474bn (49% of the total).
chart
Since the end of the EU transition period on 31 December 2020, growth in UK goods exports has slowed relative to the G7. But service exports have performed more strongly. The OBR estimates this is because the UK-EU trade and cooperation agreement Boris Johnson agreed with Brussels created more friction for goods than services. Exporters, in particular, face more red tape and border delays.
Bloom compared the situation to a shop moving from the centre of town to the outskirts: “You make it harder to get there and back, and not surprisingly there is less demand. And you add to the uncertainty by opening and closing all the time, and people don’t know if you’re there.”
Uncertainty sapped business investment
After a shock result, no clear plan from the government or leave campaigners led to years of infighting over just what Brexit – never properly defined, and often subjective – should be in practice. Amid that political turmoil businesses froze their investment plans.
As a consequence, investment is estimated to be close to 18% lower than it would have been under remain and productivity up to 4% lower, reflecting reluctance to invest in equipment and projects due to the uncertainty.
John Springford, of the Centre for European Reform, said: “The investment strike started in 2016 and continued through to 2021-22, and then it started to rise again once certainty about the trading relationship had been established.
chart
“That has an impact on productivity. It means workers don’t have the best kit, and existing capital [equipment and buildings] is deteriorating, so you certainly assign some of the GDP losses to that.
“Brexit is more a story of stagnation, and a slow puncture, than of recession and rising unemployment.”
Employment has suffered
Unemployment in the UK fell after the Brexit referendum to among the lowest rates since the 1970s, before rising sharply during the pandemic. However, experts say this obscured underlying challenges.
First, wage growth has stagnated. Average real wages barely grew until picking up strength after the pandemic, and even given recent faster growth are only £43 a week higher on average, after taking inflation into account.
Britain emerged as the worst-performing country in the G7 for the pace of its recovery in workforce participation after the easing of pandemic restrictions, with rising ill-health pushing up economic inactivity – when working-age adults are neither in a job nor looking for one.
chart
Young people have borne the brunt of weaker participation rates, including an increase in the number of 16- to 24-year-olds not in education, employment or training (Neet) to more than a million, the highest level since 2013.
According to Bloom, employment in the UK is between 3% and 4% lower than it would have been under a remain scenario.
Brexit support has faded
Public support for Brexit has steadily fallen since the 52%-48% leave vote. Polling last month by YouGov shows 70% of Britons support a closer relationship with the EU without rejoining the bloc, its single market or customs union.
chart
More than two-thirds think looser ties would be a mistake. A majority – 56% – would back rejoining the bloc outright. Support to rejoin is strongest among Green and Labour voters, and weakest among backers of Nigel Farage’s Reform UK, of whom 83% are opposed.
Net immigration surged, but is now falling
Post-Brexit, despite the promises of the leave campaign and the Conservative government, net migration to the UK rose sharply, reaching a record high of almost 1m in the year to June 2023.
The war in Ukraine and pent-up demand for migration after the easing of Covid restrictions played a contributing role. But changes to migration rules after Brexit also had an impact.
chart
Almost 90% of arrivals have been from outside the EU, while net migration from the 27-country bloc has fallen. Employers have struggled with staff shortages amid the loss of previously readily available EU workers, particularly in construction, hospitality and manufacturing.
Net migration has fallen further – dropping to 171,000 last year – amid tougher controls first introduced under the Conservatives that have since been tightened further under Labour.
