Brexit has hurt Britain’s competitiveness, eroded productivity and lowered workers’ real wages for years to come, a newly blown-up study said this morning.
The report said Britain has experienced an 8 percent drop in trade openness – trade as part of economic output – since 2019, in its three largest non-EU goods import markets in 2021 The US, Canada and Japan have lost market share.
The immediate impact of the referendum result became clear, the report said, with a “depreciation-induced inflation spike” with the cost of living for homes rising, and business investment falling.
The Resolution Foundation and the LSE said leaving the European Union has undermined how open and competitive the UK economy is.
The study suggested that the UK did not see a large relative decline in its exports to the EU that many had predicted, although imports from the EU have fallen more rapidly than the rest of the world.
The full impact of the trade and cooperation agreement would take years to be felt, but the move to a more closed economy, the authors say, would make Britain less competitive, leading to lower productivity and real wages, it was predicted.
Research estimates that labor productivity will decrease by 1.3 per cent by the end of the decade by changes in trade rules alone, contributing to weaker wage growth, with real wages averaging £470 per worker per year lower than it would have been otherwise.
Our fishing industry’s output is expected to drop by 30 percent and some workers will face “painful adjustments”, the foundation said.
The report said that the northeast is expected to suffer the most from Brexit as its firms depend on exports especially to the European Union.
Sophie Hale, lead economist at the Resolution Foundation, said: “Brexit represents the biggest change in Britain’s economic relationship with the rest of the world in half a century.
“This has led many to predict that it will cause a particularly large drop in exports to the EU, and will fundamentally reshape the UK economy for more manufacturing.
“The first of these has not passed, and the second is unlikely to do so. Instead, Brexit has had a more widespread impact by reducing Britain’s competitiveness and openness to trade with a wide range of countries. This ultimately productivity and also the real wages of workers.
“Some sectors – including fisheries – will still face significant changes in the coming years, but the overall services-led nature of the UK economy will remain largely unaffected.”
Ophi Hale, Chief Economist
Labor MP and UK Trade and Business Commission co-convenor Hilary Benn said: “The government’s Brexit deal is making businesses and consumers poorer at a time when people up and down the country struggle to make ends meet. are.
“This research makes it clear that these are not just teething problems but in fact a long-term economic problem that will persist unless something is done about it.
“There is only so much time that the government can hide from these warnings. Denial is not an effective policy.
“Ministers should now review their Brexit deal, reopen negotiations with the EU and determine the steps they intend to take to make the UK more competitive.”