The UK Economy
The Economics of Brexit
How the UK's 2016 vote to leave the EU and its 2020 exit changed trade, investment and migration, and what economists estimate it cost.
In June 2016, the UK voted to leave the European Union. It formally left in January 2020, and the transition ended on 31 December 2020.
The trade deal
The Trade and Cooperation Agreement kept zero tariffs on goods meeting rules of origin, but added:
- Customs checks and paperwork.
- Regulatory barriers for food and goods.
- Limited access for services, including finance.
Estimated effects
- The UK’s Office for Budget Responsibility estimated Brexit would reduce long-run productivity by around 4 percent.
- Studies found reduced trade with the EU, especially for small firms, and weaker business investment.
Migration
- Free movement from the EU ended.
- A points-based system followed; immigration from outside the EU, including India, rose sharply.
Northern Ireland
Special arrangements avoid a hard border on the island of Ireland, adjusted by the Windsor Framework (2023).
New deals
The UK signed trade deals with others, including India in 2025.
A small UK cheese maker who sold easily to France now needs health certificates and customs forms for every shipment, raising costs and cutting sales.
Customs checks and regulations added significant costs.
- The UK voted to leave in 2016 and left in 2020.
- The trade deal kept zero tariffs but added paperwork.
- The OBR estimated around a 4 percent productivity loss.
- Migration shifted from EU to non-EU countries.
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