By the end of this decade, the average British worker will be £470 (around £550) a year poorer. This is what a study on the consequences of Brexit predicts. According to the research report, Britain is becoming a more closed economy as a result of Brexit, with long-term adverse consequences for productivity and wages.
The report was written by researchers at the Resolution Foundation think tank and Swati Dhingra, an associate professor at the London School of Economics. Dhingra will join the Bank of England’s monetary policy committee in August.
Britain was set to suffer under new post-Brexit trade rules, which came into force in January 2021. But the feared decline in British trade with the EU never materialized.
Instead, Brexit has weakened Britain’s competitiveness and reduced openness to trade with other countries, concludes Sophie Hale, an economist at the Resolution Foundation. “It will ultimately reduce productivity, as well as workers’ real wages,” Hale said.
According to the report, Britain faces not so much tariffs on the goods it exports to the EU as greater regulatory barriers.
The net effect of new regulations would reduce economy-wide productivity by 1.3% by 2030, compared to if Britain had remained in the EU. This means a real drop of 1.8% in annual wages, or 470 pounds (550 euros) per employee.
However, the impact of Brexit differs significantly from sector to sector. For example, the fishing industry in the UK, a significant part of which has strongly advocated Brexit, is expected to contract by 30% due to difficulties in exporting its catch to the EU. The financial and legal sectors are expected to see their share of the UK economy fall by just 0.3%, according to the report.