The United Kingdom officially voted to leave the European Union in 2016 — a controversial decision that sent shock waves across the globe. Since there was an extended “transition period,” the country didn’t leave the trading block until January 2020, and trading relations remained almost the same until a new trade deal was announced in January 2021. This makes it difficult to ascertain whether the UK is better off after Brexit, and we’ll have to wait a few years for more conclusive results.
However, most experts currently agree that the country is faring worse after the move regarding the economy. Plus, the supply chain problems that arose during the COVID-19 pandemic highlighted changes in trade following Brexit.
Exports and imports
Trade with the EU accounts for roughly half of British exports, so leaving the EU ended easy access to a whopping 445 million consumers. After the UK implemented its new trading regime, many manufacturers have decided to stay away from the UK to avoid the ballooning costs of shipping products to what was once a center of trade within the EU.
The consequences of this are sure to hit the country hard over the next few years.
GDP
Recently, the Chairman for the Office of Budget Responsibility estimated that leaving the EU will prompt the UK’s Gross Domestic Product to fall by 4%, while the pandemic will cause the GDP to shrink another 2%. In other words, officials believe that Brexit will have a worse long-term impact on the UK economy than the global pandemic, but it’s hard for statisticians to separate the effects of the two.
These predictions are even more concerning when we consider that the global economy shows signs of improvement as it climbs out of the economic hole it fell into during the pandemic. For instance, world trade was higher in July than it was before the start of the pandemic at the end of 2019.
The UK has been unable to match this trade recovery, falling behind and failing to fully bounce back after one of its worst economic downturns in decades.
Concerns for the economy
While it’s difficult to separate the Brexit and COVID-19 data, it’s clear that the effects of the pandemic are being compounded in the UK by the disruption to trade caused by Brexit. Overall, it appears the UK economy is faring worse after Brexit, but it will take a few years to reach certainty about this conclusion.
