JUST before Britain’s fateful referendum on membership of the European Union 10 years ago, the government issued a stark warning: a vote to leave the bloc would lead to “an immediate and profound shock” to the economy.
By a slim margin, the public voted to leave anyway.
The warnings proved wrong, but only in their timing.
Brexit has damaged the British economy and the costs have steadily accumulated over the past decade, economists say, outweighing any benefits.
More visibly, Brexit has unleashed a torrent of political instability.
On July 20, Britain got its seventh prime minister since the vote on June 23, 2016, after Sir Keir Starmer announced his resignation on June 22.
The turmoil has fuelled a sense of regret. In a recent poll, nearly half of Britons said Brexit was going worse than expected, while another survey found that just over half would support rejoining the EU.
Pinpointing the precise cost of Brexit is difficult. The British economy has also weathered the Covid-19 pandemic, Donald Trump’s tariffs and conflicts in Ukraine and Iran.
Yet economists broadly agree on one conclusion: Britain’s economy is smaller than it would otherwise have been.
In 2016, the government assumed a vote to leave would trigger an immediate rupture in trade with the EU.
Instead, years of negotiations followed. Britain formally left the bloc in January 2020, with an 11-month transition period delaying major changes to trading arrangements until 2021.
That timing made Brexit’s economic impact harder to isolate.
One widely cited study led by Nicholas Bloom, a professor at Stanford University, estimated that Brexit has reduced Britain’s gross domestic product by as much as 8%, with the impact accumulating gradually over time.
While economists debate the exact figure, many estimate that Britain’s economy is now 4% to 6% smaller than it would have been had it remained in the EU. That translates into lower tax revenues, weaker productivity growth and slower improvements in living standards.
The Office for Budget Responsibility, Britain’s independent fiscal watchdog, estimates that Brexit will reduce long-term productivity by 4%.
However, Brexit also gave Britain freedom to negotiate its own trade agreements. Since leaving the bloc, it has signed dozens of deals covering countries around the world.
But economists say those agreements have not come close to compensating for reduced trade with the EU’s market of 450 million consumers.
Business investment has also suffered.
One of the earliest economic effects of the referendum was a freeze in corporate spending as firms delayed decisions during years of political uncertainty and trade negotiations.
Investment eventually recovered, but economists say it remains lower than it would otherwise have been.
The National Institute of Economic and Social Research estimates that Brexit-related uncertainty has reduced long-run business investment by about 4%.
“The professions and sectors that benefit are the consultants, lawyers and probably custom agents,” said Anton Spisak, a senior research fellow at the Centre for European Reform.
But overall, Brexit has had a “very negative effect” on the economy, he added.
Migration has produced one of Brexit’s most unexpected outcomes.
Rather than reducing immigration, Britain has experienced a large influx of migrants from outside the EU.
The shift has transformed the labour market, bringing workers with different skills and visa requirements.
“We’re only really in the early stages of knowing how that really profound shift in UK immigration patterns post-Brexit will play out,” said Sarah Hall, an economic geographer at the University of Cambridge and deputy director of UK in a Changing Europe.
The financial sector has proved more resilient than many predicted. Before the referendum, financial firms warned that Brexit could undermine London’s role as Europe’s leading financial centre.
A decade later, London remains the continent’s dominant financial hub. No rival city has emerged as the industry’s clear destination of choice, Hall said.
Looking ahead, some politicians favour rebuilding closer ties with Europe. Yet both British and European leaders have shown little appetite for fundamentally reopening the Brexit settlement.
“Quite a lot can change in the next decade,” Spisak said. But he expects few major shifts in the next few years.
For now, he argues, the greatest cost remains impossible to measure.
“The more important cost of Brexit is the opportunity cost. That is, all the things that have not happened because of Brexit,” he said. — ©2026 The New York Times Company
This article originally appeared in The New York Times
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