A decade after Britain voted to leave the European Union, new analysis drawing on Bank of England corporate data suggests Brexit has cost the UK economy around six per cent of its output.
The study, co-authored by Stanford University professor Nick Bloom and Bank economists, examined the decisions and financial performance of thousands of British companies in the years following the 2016 referendum.
Researchers estimated that roughly half of the economic impact stemmed from the uncertainty created by the vote itself, while the remainder reflected higher trade barriers following Britain’s departure from the customs union and single market in 2021.
“In the case of Brexit, there was a substantial economic impact on the United Kingdom, but it arose gradually over the subsequent decade,” the paper concluded.
Critics of the analysis argue that it does not sufficiently account for the strong performance of the US technology sector or the impact of Europe’s energy crisis.
Bank of England Governor Andrew Bailey has become increasingly vocal in recent months about the economic consequences of Brexit.
“I think the level of activity and growth in the economy has been lower,” Mr Bailey told journalists recently.
“And the reason for that is that if you reduce the size of the markets that we trade with, so we reduce our export markets, then that does tend to have a negative impact on growth,” he said.
Brexit has cost Britain six per cent of GDP, Bank-backed study claims
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Mr Bailey added that productivity and market size had also been affected.
The Governor sought to provide some reassurance about the financial sector, however.
He acknowledged that the impact on financial services had been “not good” but said it was “nowhere near as detrimental as many people predicted at the time”.
Prime Minister Sir Keir Starmer is expected to meet European Union leaders at a July summit to discuss food and agricultural exports, electricity arrangements and emissions trading.
For many Britons, the effects of Brexit have been most visible through changes in the cost of living.
Sterling recorded its sharpest single-day fall in more than 30 years immediately after the referendum result was announced.
The pound weakened against the euro from 1.42 in November 2015 to 1.09 in August 2019, increasing the cost of holidays and imports from the continent.
As of June 11, 2026, sterling was trading at 1.16 euros.
The EU-UK post-Brexit trade deal, signed by Boris Johnson in 2020
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The weaker currency pushed up import costs, with consumer prices estimated to have risen by 2.9 per cent as a direct consequence.
Inflation increased steadily in the aftermath of the referendum, rising from 0.5 per cent in June 2016 to 1.6 per cent by December of that year.
It reached 2.6 per cent during the following summer before climbing to 3 per cent by December 2017.
The Bank of England reduced interest rates from 0.5 per cent to 0.25 per cent in the summer of 2016 as economic growth slowed and consumer spending weakened.
Savers subsequently experienced an extended period of low returns between 2008 and 2022, although conditions have improved in more recent years.
Fixed-rate mortgage products became increasingly popular, accounting for around 90 per cent of new home loans in 2016 and rising to 97 per cent by 2022.
Brexit’s points-based immigration system also presented challenges for sectors that had traditionally relied on workers from the European Union.
Care providers and haulage businesses experienced recruitment difficulties, placing upward pressure on wages and contributing to higher prices for consumers.
Pre-referendum forecasts from the Treasury warning that house prices could fall by between 10 and 18 per cent did not materialise, with average property values instead rising by seven per cent over the period.