Written By Gage Gretter
In 2016, the citizens of the United Kingdom voted to exit the European Union in a close referendum with the ‘Leave’ side winning 51.9% of votes compared to the ‘Remain’ side with 48.1% (Pruitt, 2017). The UK did not officially leave the EU until January 31, 2020, and they didn’t cut all connection with the EU until December 31, 2020 (Hayes, 2024). The process of the UK’s departure from the EU, widely referred to as Brexit (British-exit), was a complicated and controversial change that took years to implement. What implications has this new independence had on the United Kingdom?
First, one must understand what it means to be a member state of the European Union. The EU is a political and economic union between 27 countries in Europe which offers political stability, freedom to live and work anywhere in the EU, and access to the single market EU trading bloc (European Union). The EU’s trading bloc is the largest in the world, and it is the top trading partner for 80 countries around the world (European Union). The EU’s single market allows for free, unrestricted trade between member states, and the open borders and unrestricted immigration allows all EU citizens to travel and move freely between member countries. Many member states consider the policies beneficial, but the UK began to see the EU as a hindrance rather than a helpful partnership.
In 2016, the UK officially decided to leave the EU due to the European debt crisis, immigration, terrorism, and the EU’s control over the UK economy. The UK believed that the EU’s rules and regulations were holding back their economy when they had the potential to be much more entrepreneurial and ambitious (Niederjohn, 2017). An example of a restrictive policy is the “bendy banana law” (commission regulation 2257/94) which states that all bananas sold in the EU must be free of abnormalities and should have normal curvature. The UK ‘Leave’ supporters did not want immigrants taking jobs and wanted to preserve job opportunities for UK natives (Niederjohn, 2017). Brexit supporters were disappointed by the EU’s perceived failure to bolster the economy and lack of border control. After officially exiting the EU, how did the UK’s economy react to the change?
At the beginning of 2021, the British pound was 15% weaker than the Euro compared to June 2016 during the referendum (Coyle, 2021). The pound depreciated immediately after the UK voted to leave the EU, and it has not recovered since. The lack of confidence in British businesses drove the value of the pound down while making imports more expensive and increasing inflation (Ziady, 2022). The UK’s economy had a hard time recovering from the pandemic compared to countries in the EU who benefitted from the single market. In 2023, the UK was the only country in the G7, a bloc of the most advanced economies in the world, to have a smaller economy than before the pandemic (Low, 2025). The UK’s biggest trading partner is still the EU, but with the UK’s independence, the trade relationship has only gotten more complicated and expensive for British businesses due to the customs checks and regulations even with the Trade and Cooperation Agreement (TCA) between the UK and EU (Low, 2025). The UK’s Office for Budget Responsibility estimated in 2024 that total exports and imports are down 15% compared to their aggregate had they stayed in the EU.
Overall, many agree that the impacts of Brexit have done more harm to the British economy than good. The National Institute of Economic and Social Research estimated in 2023 that real GDP was down at least 2-3% due to Brexit compared to a scenario where they stayed members of the EU. They estimate the effects will only increase and will reach 5-6% or a £2,300 loss in per capita income in 2035. Right now, the Chancellor of the Exchequer (Treasury) Rachel Reeves believes that it is necessary for the UK to improve their trade relations with the rest of the EU with the recent increase in US tariffs. Reeves hopes to take advantage of the unpredictability and aggression of the US and present the UK as a safe place for investors (Adu, 2025). The US tariff wave might be the opportunity the UK needed to improve their economic standing after their decision to leave the EU.
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