Brexit has reduced the size of the UK economy by about 6% over the past decade, according to new research based on internal data from the Bank of England, offering one of the clearest estimates yet of the long-term economic fallout from the 2016 referendum.
The study draws on detailed information collected through the Bank’s Decision Maker Panel, a large survey of thousands of UK firms used to track business sentiment, investment plans, and financial performance. Researchers reconstructed how the economy might have developed had the UK voted to remain in the European Union, comparing it with actual outcomes over time.
The findings suggest the impact was split into two phases. Roughly half of the estimated damage came from the immediate shock following the referendum, when uncertainty weighed heavily on business investment and hiring. The remainder emerged later, after the UK formally left the EU single market and customs union in 2021, introducing new trade barriers and administrative costs for exporters.
The research, co-authored by economist Nick Bloom of Stanford University alongside Bank of England economists, is the first to make full use of the central bank’s firm-level data to quantify Brexit’s long-term effects. It estimates a loss of around 6% in economic output over ten years, while other methods cited in the paper suggest a slightly larger average hit of about 8%.
Published through the National Bureau of Economic Research, the paper carries a standard disclaimer that its conclusions do not necessarily represent the views of the Bank of England.
According to the authors, smaller and medium-sized firms have borne much of the adjustment cost, facing weaker margins, delayed investment decisions, and increased regulatory burdens when trading with the EU. The study argues that Brexit reduced both the scale of UK markets and overall productivity growth.
Andrew Bailey, Governor of the Bank of England, has recently acknowledged that leaving the EU has weighed on growth. He has said that reduced access to export markets has limited economic expansion, while also noting that the impact on financial services has been less severe than some forecasts predicted.
However, the findings remain contested. Some economists argue that isolating Brexit’s impact is difficult given overlapping global shocks, including the COVID-19 pandemic and the European energy crisis. Others say the model may not fully account for shifts in global investment patterns and the relative strength of the US economy over the same period.
Despite these debates, the 6% estimate broadly aligns with other independent analyses, including projections from Goldman Sachs and studies highlighting a significant drag on UK exporters, particularly smaller firms.
The report arrives as UK–EU relations show tentative signs of stabilisation, with Prime Minister Sir Keir Starmer expected to meet European leaders to explore closer cooperation on trade, energy, and regulatory alignment.
For businesses, the study’s central message is cumulative rather than sudden. The economic cost of Brexit, it suggests, did not arrive in a single moment, but built steadily year after year through reduced trade, lower investment, and persistent uncertainty across the UK economy.
