Brexit has contributed to slower economic growth, weaker investment and lower productivity across the UK economy over the past decade, but has not triggered the economic collapse many predicted, according to analysis from St. James’s Place.
Marking 10 years since the Brexit referendum, the wealth management firm’s Chief Economist Hetal Mehta said the impact of leaving the European Union has been gradual rather than dramatic, with the effects most visible in trade, business investment and foreign direct investment.
Economic growth remains a key driver of housing market activity, influencing employment, consumer confidence and investment levels.
While Brexit’s impact continues to be debated, the analysis suggests its effect has been less about economic shock and more about a gradual reduction in momentum across the wider economy
ECONOMIC CHALLENGES
The assessment comes as the UK continues to face broader economic challenges, including subdued growth, ongoing productivity concerns and pressure on public finances.
According to Mehta, Brexit’s economic legacy has been complicated by a succession of major global events, including the Covid-19 pandemic, the energy crisis, the war in Ukraine and the surge in inflation, making it difficult to isolate its precise impact.
SLOWER-GROWTH ECONOMY
However, she argues there is clear evidence that the UK’s share of European imports has declined since 2016, while business investment and inward investment have weakened relative to previous trends.
The result has been a slower-growth economy with less investment and weaker productivity than might otherwise have been achieved.
Mehta says: “The most important consequence is not that Brexit caused an economic collapse. It did not.
“The bigger issue is that it appears to have contributed to a lower-investment, lower-productivity environment at a time when the UK could least afford it.”
She adds that a weaker pound had increased import costs and added to inflationary pressures, while changes to migration patterns had altered labour market dynamics and contributed to workforce shortages in some sectors.
