London Daily

Focus on the big picture.
Friday, Oct 23, 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
Piper Tomahawk Aircraft Crash Near Drymen in Stirling Claims Two Lives as Investigators Deploy
North Sea Transition Authority Approves Jackdaw Gas Field Production After Ministerial Authorization
Government Injects One Hundred and Forty Million Pounds to Expand Urgent Care Ahead of Winter Crisis
Department of Health Warns Further Pay Rises Will Derail National Health Service Waiting List Targets
Major Environmental Emergency Declared in South Wales Following Aerospace Kerosene Spill
Tank Barrel Production Returns to Britain as Defence Contractors Accelerate Domestic Rearmament
Government Approves Controversial Jackdaw Gasfield Development in the North Sea
National Health Service Maternity Safety Review Condemned Over Flawed Artificial Intelligence Integration
Dozens of United Kingdom Government Services Taken Offline Amid Critical Software Vulnerability
Barclays Announces Five Thousand Job Cuts Citing Artificial Intelligence Productivity Gains
Treasury Relaxes Post-Financial Crisis Accountability Rules for City of London Executives
United Kingdom Government Issues Unprecedented Guidance Urging Citizens to Stockpile Essential Supplies
United Kingdom Consumer Inflation Accelerates to Eleven-Month High Driven by Transport Costs
United Kingdom Public Sector Net Debt Breaches Three Trillion Pounds Ahead of Autumn Budget
Department for Science, Innovation and Technology Commits Fifty Million Pounds to Establish Regional Artificial Intelligence Innovation Clusters
Ofgem Directs Major Energy Suppliers to Expand Vulnerable Household Support Funds Ahead of Winter Heating Season
Home Office and National Police Chiefs Council Unveil New Intelligence-Led Strategy to Tackle Organised Immigration Crime Networks
First Minister John Swinney Secures Scottish Parliament Approval for Comprehensive Climate and Green Energy Infrastructure Strategy
National Health Service England and Trades Union Congress Finalize Agreement on Emergency Winter Staffing and Pay Frameworks
HM Treasury and Department for Business and Trade Announce Multi-Billion-Pound Sovereign Investment Pact to Spur Regional Advanced Manufacturing
Bank of England Governor Andrew Bailey Signals Potential for Faster Interest Rate Cuts as Domestic Inflation Pressures Ease Below Forecasts
Parliamentary Inquiry Highlights Urgent Need to Address Housing Shortage as Scottish Completions Hit Eleven-Year Low
United Kingdom and Singapore Sign Comprehensive Financial Agreement to Deepen Digital and Sustainable Market Ties
Greggs Announces Plan to Close Four Manufacturing Facilities and Cut Seven Hundred and Forty Jobs
International Monetary Fund Raises United Kingdom Economic Growth Forecast While Warning of Inflationary Pressures
Energy Security and Net Zero Committee Urges Government to Shift Policy Costs Onto Gas to Lower Household Bills
Housebuilding Across Scotland Plummets to Eleven-Year Low Despite Government Pledges to Tackle National Housing Emergency
Greggs Announces Factory Closures Across Northern England and Scotland Affecting Seven Hundred Forty Jobs
United Kingdom and Singapore Conclude Eleventh Financial Dialogue in Singapore to Deepen Cooperation on Digital Finance and Capital Markets
Energy Security and Net Zero Committee Urges Government to Shift Policy Costs to Gas Bills and Tap Windfall Profits to Lower Consumer Prices
British Broadcasting Corporation Announces Major Cost-Cutting Overhaul to Close Linear Broadcast Services for Television Channels BBC Three and BBC Scotland Alongside Digital Radio Station BBC Radio Four Extra
London Capital Markets Face Renewed Scrutiny After High-Profile Offerings Underperform Post-Listing
Green Party Wins Historic First Westminster Parliamentary By-Election in Gorton and Denton
Environment Secretary Emma Reynolds Unveils Sweeping Regulatory Overhaul for English Water Industry
United Kingdom Health Security Agency Confirms Thirty-Four Cases in Kent Meningitis Outbreak
Ministry of Defence Prepares Heat Pump Subsidy Cuts to Fund Urgent Military Modernization
British and European Union Officials Schedule Long-Awaited Bilateral Leaders Summit for November Twentieth
Bank of England Governor Andrew Bailey Urges Strict Fiscal Credibility to Protect British Bond Markets
United Kingdom Inflation Rises to Three Point One Percent Driven by Escalating Fuel Costs
Profit Warnings Among London-Listed Companies Reach Two-Year High Amid Global Energy Shocks
Chancellor John Healey Signals Targeted Tax Changes on Banks and London Corporate Offices Ahead of Budget
British Government Reallocates Twenty-Five Per Cent of International Climate Finance to Global Biodiversity Projects
Initial British Carbon Border Taxes Set to Undercut Parallel European Union Tariffs on Industrial Imports
Whitehall Prepares National Zero-Interest Loan Initiative to Accelerate Domestic Heat Pump and Solar Adoption
European Union Offers British Automakers Access to Hybrid Vehicle Trade Protections Subject to Strict Regulatory Alignment
British Probation Officers Threaten Widespread Industrial Action After Rejecting Five Per Cent Government Pay Offer
Microsoft Abandons Major British Artificial Intelligence Data Centre Citing Severe National Grid Power Constraints
United Kingdom Inflation Accelerates to Three Point Four Per Cent Ahead of Chancellor John Healey's Inaugural Autumn Budget
Surging Cloned Number Plates Severely Complicate Traffic Enforcement and Police Investigations
Mounting Opposition Challenges Planned Rollout of Autonomous Taxis Across London
×