London Daily

Focus on the big picture.
Friday, Jul 03, 2026

Brexit hit UK investment by £29bn, says Bank of England policymaker

Brexit hit UK investment by £29bn, says Bank of England policymaker

Brexit has dealt the UK economy a "productivity penalty" of £29bn, or £1,000 per household, a Bank of England policymaker has said.

Jonathan Haskel, an external member of the Bank's monetary policy committee, said a wave of investment "stopped in its tracks" in 2016 following the vote.

He said the UK had "suffered much more" of a productivity slowdown than other large economies because of Brexit.

The Treasury said it did not recognise Mr Haskel's figures.

The Bank of England declined to comment.

Mr Haskel, who was interviewed by website newsletter The Overshoot, was asked why he thought the UK was an "extreme outlier" when it came to facing a slowdown in productivity.

He said: "Yes, we suffered much more. A bit of that is that we have this larger financial sector. But I think it really goes back to Brexit.

"If you look in the period up to 2016, it's true that we had a bigger slowdown in productivity up to 2016, but we had a lot of investment. We had a big boom between 2012-ish to 2016.

"But then investment just plateaued from 2016, and we dropped to the bottom of G7 countries."

Since the Brexit referendum in 2016, there has been a global pandemic, swiftly followed by an energy crisis, which has made estimating any financial impact directly related to Brexit difficult.


'Productivity penalty'


But investment has stalled since the referendum.

Some economists, including the International Monetary Fund, have suggested that uncertainty surrounding Brexit, including the unsettled issue of the Northern Ireland Protocol, has deterred at least some spending.

Mr Haskel said that the Brexit referendum had an impact on economic growth as a result of the reduction in trade, with the UK opting to leave the EU and its single market and secure trade deals elsewhere.

He referred to a calculation to show what the UK economy could have looked like if investment had carried on growing at the rate it had been before the referendum, compared to what it is currently growing at.

Mr Haskel described the hit to the economy as the "productivity penalty", which amounted to about 1.3% of gross domestic product (GDP). GDP is an important tool for looking at how well, or badly, an economy is doing.

"That 1.3% of GDP is about £29bn, or roughly £1,000 per household," he added.

Sir Richard Branson is among the business bosses who have suggested the cost of Brexit red tape would put them off investing in the UK.

The pro-Brexit group Briefings for Business claims there is no evidence of a Brexit-related hit to investment.

A Treasury spokeswoman added that since leaving the EU single market, the UK had grown faster than France and Germany.

"The government is making the most of our Brexit freedoms to grow the economy, including ambitious financial services sector reforms which will unlock over £100bn of investment, and we are reviewing EU-derived rules in other critical growth sectors this year," she said.


Recession warning


Figures released last week showed that the UK narrowly avoided falling into recession in 2022, but the Bank expects it to enter one this year.

A recession is typically defined as when the economy shrinks for two consecutive three-month periods. It means the economy is generally performing badly and companies may make less money and cut jobs, leaving the government with less tax revenue.

The Bank of England is the UK's central bank and has a major influence on managing the country's economy. It is responsible for setting interest rates, which are at a 14-year high in an attempt to reduce inflation - the rate at which prices rise.

Mr Haskel, who has consistently voted in favour of hiking interest rates, also told The Overshoot that inactivity in the labour market was a distinctly "British thing".

"Inactivity behaviour here looks very different to other countries: we've had a rise while other countries have had a fall," he said.

Nearly nine million people in the UK are currently "economically inactive", which is where people are not actively looking for work.

The government has been considering plans to coax retired middle-aged workers back into jobs in an attempt to boost the economy.

Newsletter

Related Articles

0:00
0:00
Close
Luxury bags take over the World Cup: style, status symbol, or just showing off?
UK Parliamentary Committee Launches Inquiry Into Falling Primary School Rolls and Public Service Impact
UK House of Lords Debates Electoral Commission Powers and Political Finance Reform
UK Parliament Considers Expanding Carbon Rules to International Aviation and Shipping Emissions
UK Traffic Commissioner Revokes Hampshire Haulage Operator Licence Over Regulatory Failures
UK Parliament Examines Risks in Public Contracts Awarded to Technology Firm Palantir
UK Competition Watchdog Moves Toward More Flexible Merger Rules to Support Efficiency and Growth
UK Government Seeks Approval for £1.15 Trillion Public Spending Plan Amid Scrutiny Over Department Budgets
UK Parliament Debates Sweeping National Security and Steel Industry Nationalisation Bills
UK Government Issues Formal Apology for Historic Forced Adoption Practices and Announces £4 Million Support Scheme
UK DEFENCE AND TECHNOLOGY STRATEGY TILTS TOWARD SOVEREIGN CAPABILITY AND INDUSTRIAL INVESTMENT
UK ECONOMIC POLICY OUTLOOK SHAPED BY LEADERSHIP TRANSITION AND FISCAL SIGNALS
STERLING STRENGTHENS AMID SHIFTING MONETARY OUTLOOK AND GLOBAL LABOUR MARKET SIGNALS
UK HPV VACCINATION PROGRAM NEARLY ELIMINATES CERVICAL CANCER DEATH RISK IN YOUNG WOMEN
UK EXPANDS PRISON SAFETY REVIEW AS GOVERNMENT SEEKS WIDER SYSTEM REFORM
UK DRIVES DIGITAL ASSETS STRATEGY WITH NEW STABLECOIN REGULATORY MODEL
UK TO EXPAND AI INFRASTRUCTURE THROUGH NEW EUROPEAN TECHNOLOGY PARTNERSHIP
UK LAUNCHES £15 BILLION DEFENCE TECH SHIFT TOWARD ADVANCED MILITARY SYSTEMS
CIVIL SERVICE FACES SHIFT IN POWER STRUCTURE AS REGIONAL GOVERNANCE PLANS EXPAND
WHITEHALL CONSIDERS MAJOR DECENTRALISATION PLAN WITH SECOND GOVERNMENT HUB IN MANCHESTER
UK TARGETS SERVICES EXPORT GROWTH IN TRADE TALKS WITH CHINA AMID GEOPOLITICAL TENSIONS
POLICE WATCHDOG PROBES OFFICERS OVER HANDCUFFING OF DYING TEENAGER IN HAMPSHIRE CASE
UK REGULATORS UNVEIL DUAL OVERSIGHT FRAMEWORK FOR STABLECOINS AND DIGITAL ASSETS
KEIR STARMER ANNOUNCES £15 BILLION DEFENCE TECHNOLOGY BOOST IN FINAL MAJOR POLICY MOVE
ANDY BURNHAM SIGNALS STRICT FISCAL RULES AS LABOUR LEADERSHIP RACE SHAPES MARKET OUTLOOK
POUND STERLING HITS ONE-YEAR HIGH AS BANK OF ENGLAND SIGNALS NO IMMINENT RATE CUTS
UK Government Confirms Rejected Asylum Seekers to Remain Amid Enforcement Challenges
UK-China Economic Talks Focus on Services Trade and High-Value Sectors
Buckingham Palace Revamp Plans Unveiled to Modernise Royal and Public Facilities
Two Dead After Light Aircraft Crash in Essex Field, Investigation Underway
Princess Diana Marked at 65 With UK Tributes Reflecting on Her Public Legacy
England Teachers Face New Pay Cap Rules for Academy School Leaders Under Education Reform
Dublin Security Alert Escalates After Stabbing and Reports of Transport Disruption
UK Government Faces Scrutiny Over £10,000 Asylum Living Cost Contribution Requirement
England Prepares World Cup Knockout Match Against Democratic Republic of Congo
Northern Rail Project Warned of HS2-Style Cost Risks by UK Parliamentary Committee
UK Tightens Asylum Rules as Most Rejected Applicants Expected to Remain in Country
UK Heat Health Alert Issued as Temperatures Expected to Exceed 30°C Across England
Halifax Brand to Disappear From UK High Streets in Lloyds Banking Group Restructuring
England Teachers Receive 6.6 Percent Pay Rise Over Two Years as Schools Warn of Budget Strain
UK Defence Spending Plan Sparks Budget Clash as Regional Infrastructure Projects Face Pressure
Inquest Continues in Northern Ireland into Death of Noah Donohoe in Belfast
UK Travel Industry Calls for Suspension of New EU Border System During Peak Holiday Season
Telegraph Media Group Acquired by German Media Firm in £575 Million Deal Completion
House of Commons Warns Northern Rail Upgrade Risks Repeating High-Speed 2 Cost Overruns
UK Transport Unions Warn of Summer Strike Action Over Pay Disputes
UK Health Secretary Calls Maternity Care Review a “Watershed Moment” for NHS Reform
Nigel Farage Faces Questions Over £270,000 Payment Linked to Gold Marketing Firm
Labour Government Faces Internal Division Over North Sea Oil and Gas Policy Direction
National Screening Committee Invites New Proposals for UK Health Screening Programmes
×