Brexit, Five Years On

Abstract:

The impact of Brexit five years ago is difficult to fully analyse, further complicated by the COVID-19 pandemic. However, it appears that it had significant negative effects on the British and European economies, although the trade disruption impacted the EU less.. Additionally, Brexit has proven unlikely to cause a domino effect of dissolution within the UK or the EU.

BY ALFRYD VAN BRUGGEN

editors: Brighde Atkinson, Lydia Hanna

On January 31st, 2020, five years ago today, the United Kingdom officially left the European Union. This remains the only time a country has left the world’s largest common market and was seen as a watershed moment in British politics. Grand promises and dire predictions for the future of the United Kingdom surrounded the 2016 referendum and subsequent negotiations. Pro-Brexit politicians claimed that leaving the EU would allow Britain to forge new connections and allocate more resources to domestic institutions like the National Health Service; dissenting voices warned that Brexit would reduce the relevance of the UK on the global stage and slow the economy. While five years is too soon to understand the complete ramifications of this deal, it is possible to begin examining the effects of the United Kingdom leaving the European Union.

Economic Impact:

Measuring the impact of Brexit on the British economy would be a difficult task at the best of times, complicated by it coinciding with the COVID-19 pandemic’s severe economic disruption. Nonetheless, the harm caused by leaving the EU can be estimated. For example, the United Kingdom had a decrease of 10.3% to its GDP in 2020, greater than any other G7 economy [1]. The Office of Budget Responsibility has estimated that leaving the EU has reduced imports and exports by 15% [2]. The bulk of this reduction falls upon smaller firms that are unable to navigate the new trade barriers as effectively as larger firms [3]. British companies have also lost an estimated £2.4 billion each year between 2016 and 2021 due to capital uncertainty in the lead-up to the UK officially leaving the EU [4]. These factors have created a 4% decrease in long-run productivity relative to the UK remaining within the EU [2]. The “Trade and Cooperation Agreement” (TCA), governing British-European trade relations, has created fewer economic benefits than membership in the European Union.

Some advocates of Brexit asserted that Brexit would allow the UK to increase its prosperity by negotiating new trade deals with global partners; a so-called “Global Britain.” However, this has not materialised. Britain is still to create the proposed free trade deals with the United States or India. While they have joined the “Comprehensive and Progressive Agreement for Trans-Pacific Partnership” (CPATPP) with several Pacific Rim countries, the projected impact of this agreement is minimal, given the UK’s distance from these trading partners [5]. Additionally, while Canada and Mexico are both members of the CPATPP, neither has ratified Britain’s inclusion. This highlights the weakness of the UK as an independent negotiator; consequential potential trade partners are hesitant to make trade deals with London. Five years on, it is clear that Britain’s hope of replacing its European trade with partners abroad is not a realistic aspiration.

While the UK has struggled to supplement its lost trade, the EU has largely made up for post-Brexit trade decreases with more trade between member states. Studies have indicated an approximate increase of 6.1% between European countries since Brexit [6]. Europe was better equipped to cope with Brexit than Britain; the single market allowed firms to find new places to do business with relatively little disruption. However, this does not mean the EU was immune to the negative economic impacts of Brexit. Depending on the level of trade barriers erected within the framework of the TCA, Europe stands to lose out on between 280,000 to 1.2 million jobs in the long run [7]. This even affects countries distant from the UK due to their integration within European supply chains and productivity networks. The EU is comparatively better off than the UK after Brexit, but both sides have lost significant economic opportunity which will only compound in the years to come.

Political Impact

When the UK voted to leave the EU, voices on both sides predicted political disintegration. On the one hand, there was concern that Brexit would start a domino effect within Europe, causing other countries such as Poland and Italy to face similar challenges to their membership in the Union [8]. Brexit might have been the beginning of the end for the EU if emboldened Eurosceptics began undermining European cooperation. On the other hand, voices within the UK predicted that Brexit might reinvigorate separatist movements in Northern Ireland and Scotland, both of whom voted to remain within the EU [9]. The referendum underscored the differences these nations have with England and threatened to inflame the Irish border, both potential threats to the unity of the UK

Five years after exiting the EU, neither of these predictions have come to pass. No other country has attempted to follow Britain’s lead out of Europe. Public trust in the EU is at its highest point since 2007 [10]. Rather than tear Europe apart, Brexit has allowed the EU to demonstrate its value and present a cautionary alternative [8]. It seems unlikely that another member state will exit in the near future. Brexit has also not undermined British integrity. While support for Scottish independence has remained steady, the Scottish National Party has failed to capitalise on this post-Brexit [11] and suffered its worst election results since 2007 [12]. While the SNP’s electoral woes cannot be attributed to Brexit, they leave Scottish independence in political limbo, demonstrating that Brexit was not the disruptive force many feared (or hoped) it was. Brexit’s effect was more pronounced in Northern Ireland, where Unionist protests over the EU trade agreement prevented the formation of a government for two years. The fallout of Brexit also saw Sinn Féin control the position of First Minister for the first time since the position’s establishment [13]. While these were undoubtedly significant developments, little tangible progress has so far been made towards Irish reunification, even five years after Brexit.

Conclusion

Five years after the UK left the EU, economists are beginning to analyse the impact of this monumental decision. This task has been complicated by the COVID-19 pandemic that devastated the global economy.  However, data indicates that the British economy suffered significantly more than it would have remaining in the EU. Promised global trade deals have failed to materialise in the magnitude they were hoped for. While Europe faired better, economists still project a significant loss in economic opportunity due to Brexit. However, the most pessimistic predictions of the dissolution of the UK or the EU remain unrealised. Despite the tumultuous years of Brexit negotiations, the current arrangement seems likely to hold for the immediate future.

Sources

[1] Alicja Hagopian, Kate Devlin, “The Damning Statistics that Reveal the True Cost of Brexit, Five Years On,” Independent, 2025, https://www.independent.co.uk/news/uk/politics/brexit-cost-statistics-numbers-five-years-eu-b2676692.html

[2] “Brexit Analysis,” Office of Budget Responsibility, 2024, https://obr.uk/forecasts-in-depth/the-economy-forecast/brexit-analysis/#assumptions

[3] Rebecca Freeman, “How Brexit affected the trade of UK firms,” Center for Economic Performance, 2024, https://blogs.lse.ac.uk/politicsandpolicy/how-brexit-affected-the-trade-of-uk-firms/

[4] Agnes Norris Keiller, “Brexit and Investment,” Centre for Economic Performance, 2024, https://cep.lse.ac.uk/_NEW/PUBLICATIONS/abstract.asp?index=11068

[5] Thomas Sampson, “Global Britain has Failed – What Next?” Centre for Economic Performance, 2024, https://blogs.lse.ac.uk/politicsandpolicy/global-britain-has-failed-what-next/

[6] Steven Buigut, Burcu Kapar, “How did Brexit impact EU trade? Evidence from real data,” The World Economy, 2023, https://doi.org/10.1111/twec.13419

[7] Hylke Vandenbussche, William Connell, Wouter Simons, “ Global value chains, trade shocks and jobs: An application to Brexit,” The World Economy, 2022, https://doi.org/10.1111/twec.13259

[8] Waltraud Schelkle, Anna Kyriazi, Joseph Ganderson & Argyrios Altiparmakis, “Brexit – the EU membership crisis that wasn’t?,” West European Politics, 2024, https://doi.org/10.1080/01402382.2024.2325780

[9] Meghan L. O'Sullivan, “Brexit: The Future of Northern Ireland and Scotland,” Council on Foreign Relations, 2021, https://www.cfr.org/event/brexit-future-northern-ireland-and-scotland

[10] Eurobarometer, “Standard Eurobarometer 102,” European Commission, 2024, https://europa.eu/eurobarometer/surveys/detail/3215

[11] James Cook, “What impact could this election have on Scottish independence?,” BBC, 2024, https://www.bbc.com/news/articles/c0447rxk7jxo

[12] Lynsey Bews, “Why the SNP was left shocked by Labour's surge,” BBC, 2024, https://www.bbc.com/news/articles/c51yvl3j07mo

[13] Jayne McCormack, “NI's government has returned Stormont - what you need to know,” BBC, 2024, https://www.bbc.com/news/uk-northern-ireland-67726389