Five years after the United Kingdom embarked on a historic separation from the European Union, the economic impact of Brexit remains at the forefront of political and public discourse. Commemorated on January 31, 2025, this milestone has not only redefined the UK’s relationship with Europe but also provoked fervent discussions about its long-term economic outcomes.
The Scottish National Party (SNP), following this notable anniversary, has reiterated its stance against Brexit, arguing it has resulted in detrimental long-term economic consequences. They assert, based on research from the House of Commons Library, the need for the UK to reconsider its ties with its nearest neighbors, emphasizing their belief Brexit was a costly mistake. According to their analysis, the UK’s GDP growth remains behind the EU’s, with UK growth recorded at 3.4% compared to the EU's 5.3% from 2019 to 2024.
The SNP's claims are supported by snap statistics indicating UK exports to the EU plummeted from £216 billion to £187 billion since 2019, with imports also dipping slightly. “It’s cost businesses significantly as they grapple with new barriers and additional costs,” the party maintains, advocating for either re-entering the single market or the customs union to alleviate these issues.
Not only has Brexit affected trade, but it also caused considerable disruptions within UK industries, with some politicians now exploring potential paths back to amicable relations with the EU. Alex Cole-Hamilton, leader of the Scottish Liberal Democrats, called for the establishment of a customs union agreement with the EU, which he believes could reignite the UK economy by mitigating trade friction. Conversely, Prime Minister Rishi Sunak's government has held firm to its security and defense collaboration viewpoint, reflecting the country’s broader goals for improved trade and investments.
The interplay of Brexit-induced uncertainty and global disruptions—such as the COVID-19 pandemic—has created structural barriers complicatively woven with existing economic challenges. Dr. Benjamin Caswell, Senior Economist, assessed these shifts, noting, "The chronic underinvestment caused by Brexit-induced uncertainty has hindered UK businesses from adopting new technologies.” Foreign direct investment inflows have seen a staggering 37% drop from 2016 to 2022, as multinationals moved operations to the EU to preserve market access.
Labour shortages exacerbated by the cessation of free movement have also burdened the UK economy. Sectors heavily reliant on EU workers, such as healthcare, agriculture, and hospitality, are now grappling with unmet labor demands, driving operational costs higher. Such disparities have diminished output compared to the flexibility EU countries enjoyed post-pandemic, where labour markets remained integrated.
Trade relationships have taken substantial hits as Brexit transformed the UK’s economic connection with the EU—the country’s largest trading partner. Customs checks and regulatory differences have raised costs, severely impacting UK exporters, particularly those dependent on EU markets. Even as the UK navigates through new trade agreements with countries like Australia and Canada, experts like David Henig from the European Center for International Political Economy argue these deals haven’t compensated adequately for the losses incurred from departing the EU trading bloc.
The economic estrangement seen since Brexit's implementation is neither confined to individual sectors nor short-lived. The government’s Office for Budget Responsibility estimates UK exports and imports are set to drop by approximately 15% long term, compared to projections had the UK remained within the EU framework. Beyond mere trade statistics, productivity is anticipated to be about 4% lower, laying bare the enduring challenges to economic growth.
Contrary to the anticipations of some Brexit supporters who believed the global trade deals would offset domestic trade losses, the data reveals a more complex reality. Significant businesses maintain their status with strong export capabilities; yet, small and mid-sized entities face dire struggles. Aner remarks, “We still possess major players, but the mid-sized players are really struggling to keep their exporting position.”
Even after five years, the debate around Brexit remains hotly contested. Public sentiment appears to be shifting, with polls indicating many now regret the decision to leave the EU, casting shadows over future initiatives for rejoining. With political leaders like Labour’s Prime Minister Keir Starmer aiming to reset UK-EU relations but firmly ruling out rejoining the customs union or single market, experts wonder how far the rhetoric can translate to genuine reforms.
Challenges persist, with rising populism across Europe complicates decisions for UK leaders hoping for renewed cooperation. Importantly, the freedom once sought through Brexit began as enmeshed in divisiveness, and finding new pathways for collaboration with the EU has become both urgent and complex. Sector leaders like Lars Andersen, whose business navigated the new landscapes crafted by Brexit, remain cautiously optimistic yet acknowledge, “I suspect it will happen, but it will happen slowly and subtly without politicians particularly shouting about it.”
Reflecting on the last five years, irrespective of varying political stances, the continued effects of Brexit on the UK economy exhibit lasting changes across trade, labor, and investment landscapes—revealing just how significant this period has been and will persist to be as the UK redefines its place on the global stage.