The UK economy has taken a 6% hit from Brexit, according to economists’ analysis of internal Bank of England data – a blow that has also cost up to one million jobs and “permanently scarred” the nation’s finances, a decade after the referendum.
The study, led by Stanford University professor Nick Bloom and economists at the Bank of England, examined company-level data the Bank uses to set interest rates, reconstructing how the UK would have grown without leaving the EU. It found that about half the damage came from the sheer surprise and uncertainty of the post-referendum period, while the rest stemmed from rising trade barriers after the UK left the customs union and single market in 2021.
“Brexit cost UK economy 6% and up to one million jobs in a decade, studies show.”
“In the case of Brexit, there was a substantial economic impact on the United Kingdom, but it arose gradually over the subsequent decade,” the paper concludes.
Bloom argued that the UK was growing fast before the vote and could have at least partially kept pace with the US. The Bank’s governor, Andrew Bailey, has become increasingly candid in recent speeches. “I think the level of activity and growth in the economy has been lower,” he told journalists, adding that “if you reduce the size of the markets that we trade with … that does tend to have a negative impact on growth.” However, he said the effect on financial services was “nowhere near as detrimental as many people predicted at the time.”
Separate research from the Resolution Foundation, co-authored by Professor Gregory Thwaites, paints a starker picture. Published late last year, it concluded that leaving the EU reduced UK GDP by 6% to 8%, slashed investment by 12% to 18%, and cut employment by 3% to 4% and productivity by a similar margin. “It’s much worse than we thought,” Thwaites said last week. “In any one year we are £240bn poorer than we would have been. We didn’t lose all of that growth in one year, we lost it over the course of 10 years.”
The latest version of the Bank-adjacent study was published just ahead of the 10-year anniversary of the referendum. It used company data alongside five more traditional methods, which pointed to an average 8% hit – higher than the 6% from the company-level analysis. The paper carries a disclaimer that “the views expressed do not necessarily represent those of the Bank of England.”
Some policy economists argue that modelling growth without Brexit is difficult, especially amid multiple global crises, and that such studies overstate Brexit’s impact. But the Bank’s own data and multiple independent analyses suggest the UK’s economy remains in the grip of chronically weak growth, with major consequences for public finances and living standards.