Business
Brexit Cost UK Economy 6%, Bank of England Company Data Shows
Brexit has stripped roughly 6 per cent from the size of the UK economy over the past decade, according to economists who have analysed internal Bank of England data covering the decisions, views and financial results of thousands of British firms since the 2016 referendum.
The study drew on the same intelligence the Bank uses to set interest rates, reconstructing how the UK might have grown had it voted to stay in the EU. Its conclusion is that about half the damage came from the sheer shock and uncertainty of the post-referendum years, with the remainder flowing from the higher trade barriers that followed Britain’s exit from the customs union and single market in 2021.
For the small and medium-sized firms that make up the bulk of the UK economy, the finding will feel less like an academic revision and more like a description of the past ten years: thinner margins, postponed investment and the steady accretion of paperwork at the EU border.
The research is co-authored by the British economist Nick Bloom, a professor at Stanford University, alongside economists at the Bank of England. Crucially, it is the first time the Bank’s granular information on the corporate sector has been deployed in this way.
That information comes from the Decision Maker Panel, a survey the Bank set up in 2016 with the express purpose of gauging the economic impact of Brexit. Normally used to help inform interest-rate decisions, it allowed the authors to track, year by year, how exposed individual firms were to different facets of Brexit, the impacts they reported, and the changes that showed up in their accounts.
The company-level data point to a 6 per cent hit over ten years. Set alongside five more traditional methods of analysis, the wider studies suggest a steeper average of around 8 per cent. The full paper, published through the National Bureau of Economic Research, sets out the economic impact of Brexit in detail, and carries the customary disclaimer that “the views expressed do not necessarily represent those of the Bank of England”.
Bloom argues that the UK was growing briskly in the years before the vote and could have at least partly matched the United States but for the disruption. The Bank’s company data, he says, offers important corroboration. His paper concludes that “in the case of Brexit, there was a substantial economic impact on the United Kingdom, but it arose gradually over the subsequent decade”.
The timing is notable. The Bank’s most senior figures have become markedly more forthcoming in recent months about the consequences of leaving the EU, a shift Business Matters has tracked as the governor warned the Brexit impact would stay negative for the foreseeable future.
Speaking to journalists, governor Andrew Bailey said that as a result of Brexit, “I think the level of activity and growth in the economy has been lower.” He went on: “And the reason for that is that if you reduce the size of the markets that we trade with, so we reduce our export markets, then that does tend to have a negative impact on growth,” adding that productivity and the size of the market had also been affected.
Bailey did, however, temper the verdict on the City. The impact on financial services, he said, was “not good”, but “nowhere near as detrimental as many people predicted at the time”.
Not everyone accepts the headline number. Some policy economists contend that it is inherently difficult to model how the UK would have fared without Brexit, and that such studies risk overstating the effect at a time of overlapping global shocks. Critics also argue the analysis does not fully capture the outperformance of US investment and technology, or the European energy crisis that struck four years ago.
The 6 per cent estimate sits within a familiar range. It is a touch above the 5 per cent blow calculated by Goldman Sachs, and it chimes with mounting evidence that smaller exporters have borne the brunt, as seen in the £27bn hit to UK exporters where the smallest firms have been squeezed hardest.
The latest version of the study has landed just ahead of the tenth anniversary of the referendum, and against a backdrop of cautious rapprochement. Prime Minister Sir Keir Starmer has said he will meet his EU counterparts at a summit in July to agree deals on food and farm exports, as well as electricity and emissions trading, with further areas of cooperation and alignment expected to be on the table.
For Britain’s business owners, the political mood music matters less than what it eventually delivers at the border. A decade on from the vote, the lesson buried in the Bank’s own company data is a sobering one: the cost of Brexit did not arrive in a single dramatic shock, but accumulated quietly, firm by firm, year after year.
Jamie Young
Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.
When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.
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Alan Greenspan, former chair of the board of the governors of the Federal Reserve System, died on Monday at the age of 100 years old, according to a statement from his wife Andrea Mitchell, NBC News chief Washington correspondent and chief foreign affairs correspondent.
”Alan passed away at our home this morning at the age of 100 from complications of Parkinson’s Disease,” Mitchell said in the statement.
“He was a giant of a man who helped shape the U.S. economy for decades under presidents of both parties, but was always honest in acknowledging his mistakes,” she continued. “To me he was my husband, who shaped my life from our very first date in 1984. “
Alan Greenspan Visits “The Daily Briefing” at Fox News Channel Studios on October 17, 2018 in New York City. ( Steven Ferdman/Getty Images / Getty Images)
“He had ‘irrational exuberance’ for baseball, the Washington Commanders, tennis, golf and music, especially jazz. He will be remembered for his brilliance and his kindness,” Mitchell noted. “Being his life partner was the joy of my life.”
Fox Business Network’s Edward Lawrence contributed to this report
BIGBANG’s Daesung and KARA’s Hur Youngji have denied dating rumors. Recently, dating rumors between the two surfaced when they were spotted appearing close at MAMAMOO’s concert.
Where the Rumors Started
The speculation began after the two were photographed sitting near each other at the concert, with Daesung seated alongside Hur Youngji and Oh My Girl’s Hyojong among the attendees. A social media post sharing photos from the event quickly drew widespread attention, with fans noting the pair appeared close and cozy while looking at a phone together before the concert began.
The moment took on added significance for longtime fans given a previous on-air comment. Daesung has interacted with both idols on his YouTube show, however fans recalled that after Youngji’s appearance on the program, fellow BIGBANG member Taeyang had commented that the two would “hit it off.” Comments on the resurfaced video also playfully “shipped” the two together based on their interactions, with many online joking that the pair appeared to be on a “date.”
The Agency’s Response
In response to the rumors, a source from Daesung’s agency R&D Company clarified the nature of the relationship. “They became closer after ‘ZIP DAESUNG,’ and they went to watch MAMAMOO’s concert together. They are just close peers, and the dating rumors are not true,” the representative said.
A separate statement to CBS Nocut News offered a similarly direct denial, with a representative from Daesung’s agency describing the two as simply “close colleagues,” quickly shutting down speculation about a romantic relationship.
How They First Met
The connection between Daesung and Youngji traces back to her appearance on his variety program. Previously, Hur Youngji starred on an episode of Daesung’s YouTube program “ZIP DAESUNG,” which marked the beginning of their relationship as friends and colleagues in the industry.
Daesung’s Recent Activities
The dating speculation arrives during an especially active period for Daesung professionally. In April, BIGBANG took the stage at Coachella as a full group — G-DRAGON, Taeyang, and Daesung together — for the first time, a set that doubled as the opening signal for the group’s 20th-anniversary world tour.
Youngji’s Upcoming Projects
Heo Youngji, for her part, has also been keeping active on the variety front. She’s set to appear as a storyteller on the reality-based thriller talk show “The Psychopath I Met,” premiering July 12, giving her a notable new platform separate from her music career with KARA.
A History of Playful Speculation Involving Daesung and KARA
This isn’t the first time Daesung’s interactions with KARA members have generated fan speculation about a possible romance. His YouTube program previously featured a separate segment involving fellow KARA member Kang Jiyoung, during which the two participated in a playful blind-date format episode that similarly fueled fan theories and online discussion about potential chemistry between them, separate from the more recent rumors involving Youngji.
That pattern of fan speculation surrounding Daesung’s appearances with various KARA members reflects a broader, long-running fan interest in potential connections between BIGBANG and KARA, two groups whose members have appeared together on variety programming on multiple occasions over the years.
For Now, the Rumors Have Been Put to Rest
By the agency’s account, the two are just close colleagues who happened to catch a concert together, friends in tow. With both Daesung’s representatives and the broader official response framing the relationship strictly as a professional friendship, the latest round of dating speculation appears to have been resolved, at least for now, through the agency’s direct denial.
With Daesung continuing preparations for BIGBANG’s ongoing 20th-anniversary world tour and Youngji preparing for her upcoming role on “The Psychopath I Met,” both artists appear focused on their respective professional commitments in the weeks ahead. Given the pattern of recurring fan speculation surrounding Daesung’s variety show appearances with various KARA members, however, it remains likely that any future public appearances together will continue to draw attention and renewed rounds of dating chatter from fans, regardless of the most recent denial from his agency.
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