Stanford study finds Brexit reduced UK GDP by up to 8 per cent
New research from Stanford University and King’s College London indicates the UK economy is significantly smaller than it would have been had the country remained in the European Union, with trade barriers causing severe contraction in agri-food exports and surging inflation.
A decade after the United Kingdom voted to leave the European Union, new economic data indicates the decision has reduced the national gross domestic product by up to 8 per cent. Research from Stanford University’s Institute for Economic Policy Research suggests the UK economy is now significantly smaller than it would have been had the country remained in the bloc, leaving average citizens substantially poorer and straining public finances.
Economists at Stanford utilised two distinct modelling methods to assess the economic impact. The first compared the UK’s growth trajectory against international peers, adjusting for global shocks such as the pandemic and geopolitical conflicts. Gregory Thwaites, an associate professor at the University of Nottingham and co-author of the study, stated that based on this peer comparison, the economy is approximately 8 per cent smaller than it would have been without Brexit.
The second method analysed firm performance within the UK, specifically comparing businesses with high ongoing interaction with the EU against those with less contact. This firm-level analysis revealed that companies heavily engaged in cross-border trade were performing significantly worse. Thwaites noted that this model suggests the UK is about 6 per cent poorer than it would have been without leaving the EU, highlighting a consensus among economists that the exit has caused significant damage.
Trade barriers have disproportionately affected goods such as cars and agri-food produce. According to Britain’s Food and Drink Federation, UK food exports to the EU have shrunk by nearly a quarter since the exit. The administrative burden has intensified, with one logistics company owner describing the export process for lamb and beef as requiring 26 stamps on paperwork, a stark contrast to the single sheet required previously. This friction has contributed to sharp price inflation, with basic items like orange juice seeing prices soar by 134 per cent.
The loss in tax revenue resulting from reduced economic activity is hampering public services that were already under pressure from austerity measures implemented by the previous government. Jonathan Portes, a professor at King’s College London, warned that the economic damage is compounding existing issues in welfare, healthcare, and infrastructure. While hopes remain for new trade agreements in 2027 to ease restrictions on dairy, eggs, and meat, experts predict the economic drag will persist, with polling by YouGov showing nearly 60 per cent of Britons now believe leaving the EU was a mistake.
