Brexit, the withdrawal of the United Kingdom from the European Union, has proven to be a substantial economic challenge for the country. According to a comprehensive analysis conducted by experts from Cambridge Econometrics, the financial toll on the UK has amounted to £140 billion thus far. Furthermore, projections indicate that by the midpoint of the next decade, this figure could escalate to a staggering £311 billion.
Commissioned by Sadiq Khan, the Labour Mayor of London, economists and analysts at Cambridge Econometrics delved into the intricacies of modeling the hypothetical scenario of the UK remaining within the European Union. This modeling exercise involved a comparison with data released by the Office for Budget Responsibility (OBR) in March 2023, as well as forecasts based on these figures, even considering the downward revisions made in November of the previous year.
The findings of the report paint a challenging economic landscape for post-Brexit Britain, revealing lower economic growth, reduced employment opportunities, a pronounced negative impact on investments, a more substantial decline in imports compared to exports, and an emerging economic disparity between London and the rest of the UK.
One of the key metrics analyzed in the report is the Gross Value Added (GVA), a measure of the value contributed by a particular region through the production of goods and the provision of services. According to Cambridge Econometrics, the GVA in the UK was £2,207 billion in 2023 and is projected to reach £2,771 billion by 2035. However, the analysts contend that without the influence of Brexit, these figures would have been £2,347 billion in 2023 and £3,082 billion in 2035. This discrepancy indicates that the GVA was 6% lower in 2023 than it would have been without Brexit, and the projection for 2035 suggests a 10.1% reduction.
The report further posits that by 2035, the UK is anticipated to experience the consequences of Brexit in the form of 3 million fewer jobs, a 32% reduction in investments, a 5% dip in exports, and a significant 16% decrease in imports compared to what would have transpired if the UK had chosen to remain within the EU.
The analysts at Cambridge Econometrics underscored their attempt to "isolate and subtract" the Brexit effect from other significant events impacting the nation's economy, such as the global COVID-19 pandemic and the Russian aggression in Ukraine.
Sadiq Khan highlighted these calculations in a speech delivered on a Thursday evening (11.01.2024), emphasizing the need for a mature approach and openness to enhancing trade arrangements with European neighbors to address the costs associated with the Brexit-related crisis.
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