A study using Bank of England company-level data published ahead of the tenth anniversary of the Brexit referendum estimates that leaving the European Union cost the UK roughly 6 per cent of its economy over the subsequent decade. The Decision Maker Panel — a survey of thousands of British companies set up specifically in 2016 to measure Brexit’s impact — forms the empirical core of the study, co-authored by Professor Nick Bloom of Stanford University and Bank of England economists. The analysis attributes approximately half the damage to post-referendum uncertainty and surprise, and the other half to rising trade barriers following the UK’s exit from the customs union and single market in 2021. Combining the panel data with five other analytical methods produces an average estimate of around 8 per cent. Bank of England Governor Andrew Bailey said the impact was “not good” for financial services, though “nowhere near as detrimental as many predicted at the time.” Prime Minister Starmer has separately announced a July EU summit to discuss deals on food exports, electricity trading, and emissions.
The received wisdom
The Remain-minded establishment reading of this study is entirely predictable, and not entirely wrong. Brexit was an economically costly exercise conducted in the name of a sovereignty that its proponents have not yet demonstrated they know what to do with. Britain grew fast before the referendum, had already secured significant opt-outs from EU rules on the euro and Schengen, and threw that relatively comfortable position away in a fit of collective exasperation partly manufactured by politicians who had no plan for the morning after the vote. The 6-8 per cent figure represents real living standards, real wage growth forgone, real investment that did not arrive. Against that background, Starmer’s efforts to re-engage with Brussels on food standards, electricity trading, and emissions markets are the kind of pragmatic repair that good governance requires, whatever one thinks of the original decision. Governor Bailey’s increasing candour about Brexit’s costs represents the Bank finally saying what its own data had long implied.
A different read
The study is serious and deserves to be taken seriously. But there are several things it cannot tell us, and the way it is being used politically papers over some important complexity.
The first caveat is methodological. The paper’s authors themselves acknowledge that the analysis does not fully account for the outperformance of US investment and technology industries over the same period, nor for the European energy shock of 2021-22 — both of which created headwinds for the UK that were not Brexit-specific. Attributing 6 per cent of underperformance to Brexit when the comparable economy of Germany also contracted sharply in the same period, for reasons partly unrelated to trade policy, requires a degree of counterfactual confidence that no economic model fully justifies. The study is credible; it is not definitive.
The second problem is what the 6 per cent figure is being used to say politically. The implicit argument of the Remain-minded commentariat is that the Brexit verdict was simply wrong and should be undone, or as close to undone as current political arithmetic permits. Starmer’s July summit, with its agenda of food standards, electricity markets, and emissions trading, is the opening of a negotiation whose logical endpoint, for many of its advocates, is effective re-entry into the single market for goods. The governor’s increased candour is being deployed as intellectual cover for a political project.
That project may produce real economic benefits. Trade integration with your largest neighbour is generally good for welfare, and the specific deals being discussed — electricity interconnection, veterinary equivalence, emissions trading — are largely technical and non-ideological. But the framing matters. If the message to the seventeen million people who voted Leave is “your vote was a mistake, and the adults are now quietly reversing it,” the political consequence will be more turbulence, not less. The populist energy that produced the Leave vote has not been answered by a decade of economic analysis; it has been sustained by the sense that a professional class is methodically undoing a decision made by people they fundamentally do not respect.
The more honest framing — which some Brexit-sceptic economists have been willing to offer — is that the vote happened, the costs are real, and the question now is how to minimise them pragmatically without either pretending the damage does not exist or treating every practical accommodation with Brussels as a capitulation. That requires accepting two things simultaneously: that Brexit was economically costly, and that reversing it through elite manouevre rather than democratic mandate would be politically dangerous. The Bank of England’s data is important evidence. It should inform policy, not substitute for the political reconciliation that still hasn’t happened.
The anniversary is also a useful moment to ask what Leave voters were actually expressing. Some wanted immigration control, some wanted sovereignty over regulation, some simply wanted to rebuke an establishment they felt had ignored them for years. The 6 per cent GDP cost addresses one of those motivations — trade — but says nothing useful about the others. A government that treats Brexit purely as a trade problem to be technically resolved will not have understood what produced it.
What to watch
- The July EU summit: the specific deals on the table — food exports, electricity, emissions — will reveal how far Starmer is prepared to go on alignment. If veterinary equivalence requires regulatory alignment on food standards, that is a significant step toward dynamic alignment with the single market.
- The Bank of England’s future publications: Bailey’s increasing candour signals that the institution has shifted from studied neutrality to something closer to advocacy. Whether that affects its independence in other areas is worth monitoring.
- Northern Ireland protocol politics: any deal that increases UK regulatory alignment with the EU will reignite the argument about the Windsor Framework and Northern Ireland’s constitutional position. Watch for unionist responses.
- Reform UK’s messaging: Nigel Farage and Reform have already positioned themselves as the custodians of Brexit’s legacy. Any perceived reversal will be amplified and weaponised. The economic data is a gift to Starmer’s technocrats and a liability for Labour’s electoral coalition.
— J