We use cookies where necessary to allow us to understand how people interact with our website and content, so that we can continue to improve our service.
We only ever receive anonymous information, and cannot track you across other websites. View our privacy policy
How much has Brexit cost the UK economy?
Somewhere between 4-8% of GDP in the long-run – or £900 per household, per year.
Research published last year suggests that the OBR’s forecast- that the UK’s GDP is 4% smaller than if Brexit had not happened – has been proven accurate. However, more recent research from the National Bureau of Economic Research (conducted by academics as well as officials from the Bank of England and Germany’s central bank) suggests the damage could be as high as 8%, which House of Commons analysis suggested would equate to a £90bn loss in revenue for the Treasury each year. At the level of consumer spending, research by the London School of Economics suggests that Brexit has cost each household around £900 a year due to higher prices. Businesses have suffered too with the increase in bureaucracy and red tape – the Centre for European Reform suggests that exports to the EU have fallen by 16% and at least 20,000 small businesses have now stopped trading with Europe altogether.
How much would EU membership benefit the UK economy?
At least £92 billion over 10-15 years.
In short, a lot. EU membership could recoup over 90% of the damage to our economy from Brexit predicted by the OBR. The research suggests that membership would deliver a 3.6% boost to the UK’s economy, equivalent to a £92bn increase in GDP in the long run. In just one year, British businesses could see a £43bn boost in global exports, delivering vital opportunities for growth, expansion, and increasing employment across the UK. It is important to note that all of the figures from Frontier Economics are considered to be conservative estimates.
Which areas would benefit most from EU membership?
West Midlands
The parts of the UK that have been most affected by Brexit have been the former industrial heartlands of the UK. The introduction of regulatory divergence and increased red tape has most affected the goods rather than the services sector of our economy. The gains of EU membership, according to the Frontier Economics study, would be felt most strongly – outside of London – in the East and West Midlands, Yorkshire and the North East – Britain’s former industrial and manufacturing heartlands – due to an outsized boost to trade in goods.
Which industries would benefit most from EU membership?
Industrial goods
Industrial goods see the largest benefit from EU membership, as goods rather than services have been most affected by the increase in trade barriers and red tape since the UK left the EU. Over 80% of the increase in exports resulting from EU membership ($44.3bn of $54.6bn) would come from an increase in industrial goods exports, revitalising industry in the UK and incentivising an increase in investment from both domestic and international backers.
Why would the EU accept UK membership of the EU?
UK membership of the EU would give existing members a $90bn GDP boost in 10-15 years.
The benefits of EU membership are not solely for the UK. If the UK were to gain EU membership, the current bloc could experience an increase in GDP of around $90bn in the long run and see its exports rise by almost $50bn in one year. At a time of great geopolitical uncertainty, the addition of the world’s fifth largest economy to the trading bloc would prove to be mutually beneficial for all parties involved.
How does EU membership compare to the UK’s post-Brexit deals?
The economic benefits of EU membership are six times larger than all the UK’s other post-Brexit trade deals combined.
The GDP benefits of EU membership far eclipse the benefits of the UK’s post-Brexit trade deals. UK government estimates suggest a combined £15 billion long-term GDP boost from FTAs agreed since the UK left the EU: Japan, Australia, New Zealand, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (a bloc covering 11 other countries), India, and the Gulf Cooperation Council (six Middle Eastern countries). By delivering a £92 billion GDP boost, EU membership could be worth at least six times this combined amount.
How much would the current UK-EU reset benefit the UK economy?
At least £9bn over 10-15 years.
Frontier Economics modelled the potential benefits of the UK government’s current reset deal with the EU by looking at the food and drink, or Sanitary and Phytosanitary (SPS), deal that will see the UK dynamically align with EU agrifood regulations in return for the removal of SPS checks. While these are conservative estimates (which don’t include other deals the UK is negotiating with the EU), the modelling suggests that the current approach will only increase growth by £9bn in the long run and exports by £4bn in one year. The agrifood deal could only boost the EU’s growth by $9bn in the long run, just a tenth of the potential benefits of full membership.
How much would joining a customs union benefit the UK economy?
At least £19bn over 10-15 years.
When the UK left the EU, it also left the trading bloc’s Customs Union. The Customs Union eliminates all customs duties on goods passing between members, meaning that there are zero internal tariffs within the customs union and common external tariffs to countries outside the customs union. Frontier’s analysis suggests that a customs union could increase UK GDP by £19bn in the long run and exports by £9bn each year. UK membership of a customs union could only boost the EU’s GDP by $19bn in the long run, just over a fifth of the potential benefits of full membership.
How much would joining the Single Market benefit the UK economy?
At least £54bn over 10-15 years.
When the UK left the EU, it also left the Single Market as well as the Customs Union. Whereas the Customs Union is focused on removing internal tariffs and setting common external tariffs for goods, the Single Market focuses on aligning regulations and standards across the market to enable goods and services to flow freely across the EU. Frontier’s analysis suggests that joining the Single Market could deliver an increase in UK GDP of £54bn in the long run and exports by £25bn in one year. UK membership of the Single Market could boost the EU’s GDP by $55bn in the long run, still just three-fifths of the potential benefits of full membership.
How would Reform UK’s plans on Europe affect the UK economy?
A fall of at least £35bn over 10-15 years.
Both Reform UK and the Conservative party have opposed the current UK-EU reset, with Nigel Farage particularly vocal in his threat to scrap the agreements made so far. Additionally, both parties on the right of British politics have warned they would withdraw from the European Convention on Human Rights, which could lead to a full or partial suspension of the TCA. Frontier’s modelling captures this “TCA minus” by modelling increased trade frictions and regulatory distance, which could see the UK’s GDP fall by a further £35bn in the long run and see exports fall by £13bn in one year. It would decrease the EU’s GDP by almost $30bn – a full $120bn swing from the positive effect for the bloc of full UK membership.
Would EU membership help the UK and the EU deal with US tariffs?
UK GDP increases £83bn with EU membership even with US tariffs.
Frontier Economics also modelled the effect of US tariffs on both the UK and the EU, in a scenario where the UK regains EU membership. In this scenario, the UK’s GDP still increases by £83bn in the long run even with US tariffs. Exports would still increase by £38 billion in one year. The findings show that deeper integration with the UK, through membership, shields the EU from the worst impacts of US tariffs. UK membership of the EU offsets the damage done by the US tariffs to the bloc by $116bn. This suggests that for the EU, deeper integration with the UK is a robust mitigation strategy in a world of US tariffs.