Brexit will hurt Britain’s competitiveness, boost productivity and cut workers’ wages for the rest of the decade, according to a scary new study.
A report from the Resolution Foundation’s think tank, in collaboration with the London School of Economics, said leaving the EU would make Britain “poorer” in the 2020s.
The study says the immediate impact of Brexit is already clear, with the “devaluation surge in inflation” increasing the cost of living for households and reducing investment.
The study estimates that labor productivity will be reduced by 1.3% by the end of the decade through changes in trade rules, which will contribute to lower wage growth.
Economists said the real wage was set at £ 470 lower per worker on average each year than it would have been if Britain had chosen to stay in the EU.
The UK’s fishing industry is expected to fall by 30 percent and some workers will face “painful adjustments” over the next decade, the Resolution Foundation said.
The report also adds that the north-east of England – part of the red wall that Boris Johnson’s Conservatives managed to turn blue in the last election – is expected to be hit hardest by Brexit, as its companies rely heavily on exports to EU.
The United Kingdom may not have seen a large relative decline in its exports to the EU, which some predicted, many predicted, but EU imports fell faster than the rest of the world, the study suggests.
The report says the UK has seen an 8% drop in “openness to trade” – trade as a share of economic output – since 2019, losing market share in three of its largest non-EU import markets in 2021, USA, Canada and Japan.
The full effect of the Trade and Cooperation Agreement (TCA) with the EU will take years to feel, the authors say, but it is clear that the nation is moving towards a more closed economy.
Sophie Hale, chief economist at the Resolution Foundation, said Brexit was “the biggest change in Britain’s economic relations with the rest of the world in half a century.”
She said: “This has led many to predict that this will lead to a particularly large decline in exports to the EU and will fundamentally reshape the British economy to more production.
“The first of these did not happen, and the second seems unlikely to happen,” the economist added.
“Instead, Brexit has had a more dispersed impact, reducing the UK’s competitiveness and openness to trade with a wider range of countries. This will ultimately reduce productivity as well as workers’ real wages. ”
This follows a recent study by the Center for European Reform (CEF), which found that Brexit is “largely to blame” for the loss of billions in trade and tax revenues in recent years.
The think tank said that by the end of last year, the British economy was 5.2% – or £ 31 billion – smaller than it would have been without Brexit and the Covid pandemic.
“We cannot blame Brexit for the entire 5.2% of GDP deficit … but it is clear that Brexit is largely to blame,” said John Springford, author of the CEF study.
This comes when Mr Johnson’s government has been accused of hypocrisy because it plans to reduce control over the pay of City bosses, while calling for public sector wage cuts.
It is alleged that Chief of Staff № 10 Steve Barkley wrote to Chancellor Rishi Sunak with a plan to “deregulate measures to reduce the overall burden on business” and attract companies after Brexit.
Reaffirming the plan, Downing Street said the government was investigating how non-executive directors were paid, not how much – including removing “unnecessary restrictions on paying non-executive shares.”
But Labor has accused the government of using “two sets of rules” on wages – one for high-income people in the city and another for workers elsewhere.
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