London Daily

Focus on the big picture.
Wednesday, Sep 03, 2025

Brexit anniversary: How UK economy  has been a year after leaving EU

Brexit anniversary: How UK economy has been a year after leaving EU

In the months after Boris Johnson signed his post-Brexit trade deal with the European Union, the coronavirus masked the economic damage of leaving the bloc. As the pandemic drags on, the cost is becoming clearer -- and voters are noticing.

Brexit has been a drag on growth. It brought new red tape on commerce between Britain and its largest and closest market, and removed a large pool of EU labor from the country on which many businesses had come to rely. The combination has exacerbated supply chain shortages, stoked inflation, and hampered trade.

The prime minister hailed the signing of the trade accord almost a year ago as the moment when Britain took back control of its destiny. If it was, voters appear to be increasingly unhappy with the result. According to a November poll by Savanta Comres, a majority of the British population would now vote to re-join the the EU -- including one in ten who voted to leave in the 2016 referendum. In June, only 49% wanted to reverse Brexit.

In recent days, David Frost, Johnson’s key partner in negotiating Brexit, resigned, becoming the third Brexit minister to quit. In his resignation letter, Frost urged Johnson to use Brexit to turn the U.K. into “a lightly regulated, low-tax, entrepreneurial economy” but expressed dismay at the prime minister’s direction of travel, a sign that Brexit is disappointing those who saw it as a once-in-a-generation opportunity to roll back government regulation.

A year on from the signing of the trade deal, here is a look at how Brexit affected British business and the economy, and how the early outcome compares with economists’ and analysts’ predictions.

Trade

Britain’s trade with the EU has declined since the country quit the bloc, with firms hit by new customs paperwork and checks.

As of October, U.K. goods trade with the EU was 15.7% lower than it would have been had Britain stayed in the EU’s single market and customs union, according to modeling by the Centre for European Reform, an independent think-tank. That tallies with a U.K. government analysis of 2018, which predicted a 10% decline in trade.

But the figures may be flattered by the fact the U.K. has delayed implementing many of its post-Brexit border controls until 2022. From January, imports from the EU will need to be immediately accompanied by a customs declaration, and food products will face extra physical inspections from the summer.

Britain has made only limited progress in signing trade deals that go beyond the agreements it enjoyed as a member of the EU. Earlier this month, the U.K. signed its first wholly independent trade deal -- with Australia -- and preliminary terms have been agreed with New Zealand. But the economic boost from both accords is forecast to be limited. A trade deal with the U.S., touted as one of the major prizes of Brexit, appears years away.


Growth

Even before Britain completed its split from the EU at the end of 2020, Brexit had reduced the size of the U.K. economy by about 1.5%, according to estimates from the Office for Budget Responsibility. That was due to a fall in business investment and a transfer of economic activity to the EU in anticipation of higher trade barriers.

Since the U.K.-EU free trade deal came into force, the decline in trade volumes means Brexit is on course to cause a 4% reduction in the size of Britain’s economy over the long-run, according to the OBR. That’s in line with its pre-Brexit forecast.

“A loss of 4-5% of GDP is a big deal,” wrote John Springford, deputy director of the CER, in a research note, agreeing with the OBR’s prediction. “Governments everywhere would leap on a policy that would raise GDP by 5%.”

What's driving the global economyThe New Economy Daily dives into what the changing landscape means for policy makers, investors and you.

And of all the regions of the U.K., Northern Ireland - which remained in the EU’s single market for goods as part of the post-Brexit settlement - appears to have fared best.

The province has largely recovered from the hit of the pandemic, with third-quarter output only 0.3% below the final quarter of 2019, according to data from the Office for National Statistics. The U.K. as a whole is down 2.1% over the same time period.


Labour

Brexit has exacerbated a crunch in the U.K. labor supply. 200,000 European nationals left Britain in 2020, pushed away by tougher immigration rules and the deepest economic slump in three centuries. That’s helped to trigger staff shortages in sectors such as hospitality and retail, which have historically relied on EU workers, and led to empty shelves.

A smaller pool of EU labor also worsened a fuel crisis in Britain, with a shortfall of tanker drivers contributing to spate of fuel shortages during the summer. Johnson’s government has since eased visa requirements for EU workers, and the driver shortfall has since been reduced as more domestic drivers have been trained.


Finance

Brexit has pushed financial firms to move at least some of their operations, staff, assets or legal entities out of London and into to the bloc -- but the shift has been smaller than predicted, in part because the pandemic has hampered staff relocations.

According to a survey by accounting firm EY published this week, London has lost about 7,400 jobs -- down from an earlier estimate of 7,600. That’s far short of some estimates made before Britain left the bloc. In 2018, Bruegel, a think tank said that London could ultimately lose 10,000 banking jobs and 20,000 roles in the financial services industry.

Britain’s financial firms are still waiting for full access to the EU’s single market, something that relies on the EU granting a so-called equivalence decision. But progress has been glacial as disputes over Northern Ireland have soured EU-U.K. relations.

Longer term, the bigger threats to London are likely to come from New York -- which has grown its share of derivatives trading -- and the unseen opportunity cost of new jobs being created in the EU that, but for Brexit, might have been created in the U.K.
Newsletter

Related Articles

0:00
0:00
Close
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Court of Appeal Allows Asylum Seekers to Remain at Essex Hotel Amid Local Tax Boycott Threats
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
Nvidia Reveals: Two Mystery Customers Account for About 40% of Revenue
Woody Allen: "I Would Be Happy to Direct Trump Again in a Film"
Pickles are the latest craze among Generation Z in the United States.
Deadline Day Delivers Record £125m Isak Move and Donnarumma to City
Nestlé Removes CEO Laurent Freixe Following Undisclosed Relationship with Subordinate
Giuliani Seriously Injured in Accident – Trump to Award Him the Presidential Medal of Freedom
EU is getting aggressive: Four AfD Candidates Die Unexpectedly Ahead of North Rhine-Westphalia Local Elections
Lula and Putin Hold Strategic BRICS Discussions Ahead of Trump–Putin Summit
WhatsApp is rolling out a feature that looks a lot like Telegram.
Investigations Reveal Rise in ‘Sex-for-Rent’ Listings Across Canada Exploiting Vulnerable Tenants
Chinese and Indian Leaders Pursue Amity Amid Global Shifts
European Union Plans for Ukraine Deployment
ECB Warns Against Inflation Complacency
Concerns Over North Cyprus Casino Development
Shipping Companies Look Beyond Chinese Finance
Rural Exodus Fueling European Wildfires
China Hosts Major Security Meeting
Chinese Police Successfully Recover Family's Savings from Livestream Purchases
Germany Marks a Decade Since Migrant Wave with Divisions, Success Stories, and Political Shifts
Liverpool Defeat Arsenal 1–0 with Szoboszlai Free-Kick to Stay Top of Premier League
Prince Harry and King Charles to Meet in First Reunion After 20 Months
Chinese Stock Market Rally Fueled by Domestic Investors
Israeli Airstrike in Yemen Kills Houthi Prime Minister
Ukrainian Nationalist Politician Andriy Parubiy Assassinated in Lviv
Corporate America Cuts Middle Management as Bosses Take On Triple the Workload
Parents Sue OpenAI After Teen’s Death, Alleging ChatGPT Encouraged Suicide
Amazon Faces Lawsuit Over 'Buy' Label on Digital Streaming Content
×