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Brexit Five Years On: The Economic Ledger of Gains and Losses

Geoff Riley

31st January 2025

BBC Verify has this useful background article on the impact of Brexit on the UK economy five years since the UK departed the European Union.

On January 31, 2020, Britain made history, cutting its nearly five-decade-long political ties with the European Union. Fast forward five years, and the UK economy bears the marks—both visible and hidden—of this seismic shift.

Despite political promises of increased sovereignty, greater economic opportunities, and reduced migration, the data paints a mixed picture. While some sectors have managed to thrive, others have struggled with new trade barriers, labor shortages, and regulatory shifts.

1) Trade: Less Friction-Free, More Form-Filling

The UK avoided tariffs on EU trade, but businesses now grapple with non-tariff barriers—extra paperwork, customs declarations, and regulatory divergence. For many firms, particularly small exporters, these added costs and delays have made EU trade less attractive.

Studies suggest UK goods exports are between 6% and 30% lower than they would have been if Brexit had not happened. While UK services exports, such as consulting and advertising, have fared better, the Office for Budget Responsibility (OBR) still projects a 15% drop in total trade volumes in the long run, leading to a 4% permanent reduction in GDP—a roughly £100bn economic hit.

The UK has signed new trade deals with Australia, New Zealand, and the CPTPP bloc. However, government analysis suggests these deals will only compensate for 14% of the trade lost with the EU. So, while Britain has gained flexibility in trade policy, it has yet to unlock significant economic benefits from this newfound autonomy.

2) Immigration: The Shift from EU to Non-EU Workers

One of the defining messages of the Brexit campaign was to “take back control” of immigration. The UK ended free movement, leading to a sharp fall in EU net migration. However, overall migration has surged due to a rise in non-EU workers, particularly in healthcare and among international students.

In 2022 and 2023, net migration exceeded 900,000, driven by a rise in work and student visas. While this has helped fill labor shortages, sectors like hospitality and agriculture—once reliant on EU workers—have struggled with recruitment, causing supply chain disruptions and rising costs.

3) Travel: A Bumpy Landing for Tourists and Businesses

Brexit has reshaped travel for both British and EU citizens. UK passport holders can no longer use fast-track EU lanes and face additional entry requirements. In 2025, the EU will introduce an Entry/Exit System (EES) and an ETIAS visa waiver, adding further complexity to border crossings.

The UK is mirroring this with its own £16 Electronic Travel Authorisation (ETA) for EU visitors. While these measures bring the UK in line with non-EU travel rules, they also increase friction for businesses and tourism.

4) Laws: More Control, But What’s the Economic Impact?

A major selling point of Brexit was reclaiming legal sovereignty. However, rather than a clean break, the UK initially retained 6,901 EU laws to ensure continuity. Since then, only 600 have been removed, mostly minor regulations.

While Brexit has enabled targeted changes—such as scrapping VAT on sanitary products and banning live animal exports—the scale of legal divergence has been far less than expected. Critics argue that businesses now face dual regulation burdens when trading with both the UK and EU, adding costs rather than boosting competitiveness.

5) Money: Where’s the £350m a Week?

During the referendum, the Leave campaign’s famous claim—"We send £350m a week to the EU"—became a rallying cry. But what happened to that money?

Before Brexit, the UK’s gross annual contribution to the EU budget was £18.3bn (£352m per week). However, Britain also received £5bn back through farming subsidies and regional development grants, and an additional £4bn rebatemeant the net cost was closer to £9bn per year.

While these payments have stopped, the UK still owes £6.4bn under the Brexit financial settlement and has rejoined Horizon Europe, paying £2bn annually to access scientific research funding. So, while the UK technically saves money, the long-term fiscal impact remains uncertain.

Glossary of Economics Terms

  • Non-tariff barriers – Regulatory and administrative obstacles that increase the cost and complexity of trade (e.g., customs checks, paperwork).
  • Counterfactual – An estimate of what would have happened under different circumstances (e.g., how trade might have grown if the UK had stayed in the EU).
  • Net migration – The difference between immigration (people moving in) and emigration (people leaving).
  • Opportunity cost – The value of the best alternative foregone when making a decision.
  • Trade deficit – When a country imports more than it exports.
  • GDP (Gross Domestic Product) – The total value of goods and services produced within a country.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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