Brexit leaves lasting drag on UK trade, investment and growth

Nearly a decade after the Brexit vote, the economic verdict is becoming harder to dispute. Rather than triggering an immediate downturn, Brexit has acted more like a slow puncture, steadily reducing trade intensity, business investment and productivity growth. New barriers with the UK’s largest trading partner have increased costs for firms, while weaker integration into European supply chains has dampened competitiveness. Although the economy has continued to expand and businesses have adapted, most evidence suggests GDP is lower than it would otherwise have been. For an economy already struggling with sluggish productivity, Brexit has added another headwind to the growth journey.

Brexit ten years on: the economy - UK in a changing Europe

1. Using an AD-AS diagram, explain the impact of lower business investment in the economy.

2. Using your own economic knowledge, assess the key differences in the UK’s current trade agreement with the EU, the TCA, and its previous trade agreement of EU membership.

3. Discuss the net costs to the UK economy of the decision to Brexit ten years ago.