The UK economy has taken a 6% hit from the effects of Brexit, according to a study that analysed internal Bank of England data on thousands of British companies since the referendum a decade ago.
Co-author Nick Bloom, a British professor at Stanford University, said the Bank's company data offered important corroboration. The study, which also involved economists at the Bank of England, reconstructed how the UK would have grown without leaving the EU. It found about half the economic hit came from the sheer surprise and uncertainty of the post-referendum period, while the rest was from rising trade barriers after the UK left the customs union and single market in 2021.
“Analysis of Bank of England data shows Brexit has cost the UK economy 6% in lost growth over a decade.”
Bloom said the UK was growing fast in the years before Brexit and could have at least partially kept up with the US without the disruption. His paper concludes: "In the case of Brexit, there was a substantial economic impact on the United Kingdom, but it arose gradually over the subsequent decade."
The study comes as the Bank's top officials have become increasingly candid about Brexit's economic consequences. Governor Andrew Bailey told journalists: "I think the level of activity and growth in the economy has been lower. And the reason for that is that if you reduce the size of the markets that we trade with, so we reduce our export markets, then that does tend to have a negative impact on growth." He added that productivity and the size of the market were also affected. However, Bailey said the impact on financial services was "not good" but "nowhere near as detrimental as many people predicted at the time".
Some critics argue the study does not fully account for the outperformance of US investment and tech industries or the European energy shock four years ago. They say it is difficult to model how much the UK would have grown without Brexit, and that such studies overstate the impact, especially during global crises.
The latest version of the study was published just ahead of the 10-year anniversary of the referendum. It used the company data alongside five more traditional analysis methods. While the company-level data point to a 6% hit over 10 years, the wider studies suggest an average of 8%. The paper carries a disclaimer that "the views expressed do not necessarily represent those of the Bank of England."