LONDON (Reuters) – It has been exactly three years since Britain left the European Union on January 31, 2020, and a full two years since it left the transitional European Union on January 31, 2021. But it has not received the Brexit dividend promised again. Rather, the reality is that Britain pales in comparison to other developed countries in terms of trade and investment.
Three years ago, the Prime Minister at the time, Boris Johnson, declared: Britain would finally show what it could do, and confidence in the future would increase day by day.
So far, however, the opposite has happened, with a range of indicators all pointing to weaker economic growth in the UK. Opinion polls show that more people say they regret leaving the EU than those who say they don’t.
The current Sunak government insists that Britain continues to prosper with its newfound freedom. Chancellor Hunt said last week that Brexit has given the UK a brighter future by giving it room to implement policies to attract investment in areas such as the environment and high technology.
Brexit is not necessarily the only cause of Britain’s troubles, many economists believe. The coronavirus pandemic and rising gas prices after Russia invaded Ukraine have also hit hard. But one of the reasons why the economy is not doing well these days can be explained by calling it Brexit.
“This is not just a slow burn, it is a significant drop in economic performance,” said John Springford, deputy head of the Center for European Reform (CER) think tank. Highlighting the fact that there has been a succession of very bad economic data, if barriers are placed between trade, investment and the movement of people with the EU, which is the largest trading partner, trade volume, investment and gross domestic product (GMC). He said he would be hit hard.
At the end of September, the most recent data available, the UK was the only G7 economy that had not recovered to its pre-pandemic size.
The International Monetary Fund (IMF) said on Wednesday that the UK would contract by 0.6% this year, while the rest of the G7 countries will maintain positive growth.
Mr Springford estimated that Brexit would have cost Britain around 5.5% less economic output in the middle of last year than it would have if it had not left the EU.
The UK government’s Office for Budget Responsibility (OBR) and the Bank of England (BOE) also appear to have long-term Brexit net costs.
Some economists disagree with this general view.
Gerard Lyons, a pro-Brexit economist and former adviser to Mr Johnson when he was mayor of London, said it was wrong to blame Britain’s problems on Brexit. “Our problems predate Brexit,” he said, referring to very low levels of investment. He added that in order to take advantage of the benefits of Brexit, companies must seize the opportunity and implement effective growth plans.
Trade and investment data point to another Brexit problem.
The hopes that Brexit will open up the UK economy to the world are in vain, with exports of goods in particular disappointing over the last three years. Growth in total exports, including services, is the lowest in the G7 since the end of 2019.
Boris Glass, senior economist at S&P Global, said the increase in paperwork related to trade between Britain and the EU had hurt the competitiveness of small and medium-sized British manufacturers, particularly those with scarce resources to handle.
“For example, it is worth noting that the UK has more small and medium exporters than France or Germany. The burden of creating this is extremely heavy, and there are those who will not be able to compete at all.”
Reuters analysis of Organization for Economic Co-operation and Development (OECD) data shows that business investment in the UK has also lagged behind that of the US, France and Germany since the referendum in mid-2016 when it voted Britain to leave the EU.
Brexit supporters say they have ignored the fact that business investment in the UK has been unusually strong for several years until mid-2016.
But multiple business surveys show that Brexit is definitely one factor behind the weakness in investment in recent years.
“It is worrying that we are not seeing investment increase,” said Springford.