Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

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.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
×