8.1 Expected Brexit impacts – overview

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Government (2018) expected trade impacts of Brexit to cause long-run annual GDP losses of:
- 1.4% for an EEA-style agreement (~£0.5 billion per week)
- 4.9% for an FTA (~£2.0 billion per week), plus losses from migration effects
- 7.7% for WTO option (~£3.0 billion per week), plus losses from migration effects
Consensus among reputable economists (2016-2018) was that Brexit would:
- cause economy to grow more slowly than if UK had stayed in EU
  - EEA: average fall of ~2.8%
  - FTA: average fall of ~4.3%
  - WTO: average fall of ~6.4%
- cost public finances ~£300 million a week for each 1% loss of GDP
Expected Brexit impacts on the UK included:
- reduced trade volumes due to new trade barriers
- reduced EU migration due to government policy
- lower investment due to uncertainty and reduced attractiveness
- lower productivity due to reduced trade and investment
- reduced employment growth or lower wages
- poorer public services due to unfilled vacancies in e.g. social care and NHS
- small benefits from UK’s own trade deals and reduced regulation
Expected impacts on the EU
- small overall economic impact by 2030: ~0.11% to ~0.52% of GDP
- greatest impact expected for Ireland
- regional impacts also expected (e.g. in southern Germany)
Covid-19 affected different UK sectors to Brexit, leading to additional economic harm