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The British economy is affected, like other European economies, by inflation and the increase in the cost of living. But Brexit, whose agreement entered into force two years ago, seems to have accentuated this deterioration, the extent of which is still difficult to measure. But this exit from the EU has a clear impact on exports and the agricultural sector.
The British do not make a good face two years after Brexit, according to several opinion polls in recent weeks. In the latest, published on January 1, ‘The Independent ‘, reveals that almost two thirds of the population on the other side of the channel would now be in favor of a referendum on a return to the EU. According to this newspaper, “the majority of voters (56%) now believe that (Brexit) has worsened” the economic situation throughout the channel, compared to 44% a year ago.
It is true that several indicators of the British economy have turned red in recent months: UK GDP fell 0.3% In the third quarter of 2022, inflation exceeded 10% and even peaked at 11.1% yoy in October, triggering a severe cost-of-living crisis.
This economic “situation of weakness” in the United Kingdom can be explained “in the short term” as a consequence of Brexit, according to Catherine Coron, professor of British civilization at the University of Paris-Panthéon-Assas: “If we look at inflation in the United Kingdom and the US In the US, another liberal economy, there’s a 2% difference, which is huge. And while UK GDP is stagnating, US GDP is picking up.”
Added to this are the difficulties faced by companies on the other side of the Canal to operate with the new rules. The departure of the United Kingdom from the EU has meant the return of border controls, customs controls or even import duties. New rules that have also meant more administrative procedures for businessmen who import-export.
This situation is not without consequences: exports of British products to the EU have fallen by 30% during the year 2021, according to researchers at the London School of Economics. The latter believe that the Brexit deal that entered into force on January 1, 2021 “has warned about the fixed costs of exporting to the EU, which has pushed small exporters out of small EU markets” – while the big British companies have been little or not hampered in their exports.
A Brexit that has already cost more than 7,000 million dollars
“Brexit also has an impact on basic needs, with shortages in the agricultural sector, particularly fruit and vegetables,” explains Aurélien Antoine, professor of law at the Jean-Monnet University of Saint-Étienne and director of the Brexit Observatory.
The National Union of Farmers, the main agricultural union on the other side of the channel, also presented in early December on the risk of a “food supply crisis” in the United Kingdom. Indeed, the exit from the EU has complicated the hiring of European workers on whom the agricultural sector depended and some producers have seen some of their crops rot on their feet, due to lack of hands to harvest them.
To complete the picture, the City was surpassed for the first time last November by the Paris Stock Exchange in market capitalization. “This is the biggest consequence of Brexit: London’s business district is no longer Europe’s main financial center,” says Catherine Coron.
Although the full cost of Brexit is difficult to assess – various factors hurt the British economy (and European economies), including the Covid-19 pandemic and the war in Ukraine – studies have been carried out on the subject.
One, Produced by the Center for Economic Performance at the London School of Economics, revealed in early December that leaving the EU had already “cost UK consumers a total of £5.8bn ($7.11bn)” over the 2019-2021 period. adding “an average of 210 pounds to household food bills.”
“Economic uncertainty” yesterday… and tomorrow
Brexit, although it has many disadvantages for the British economy, has also been beneficial for the United Kingdom, to a lesser extent, on several points, according to Aurélien Antoine: “It has led to less competition in various sectors, particularly agriculture. The scarcity of foreign labor has also allowed British unions to negotiate wage increases (especially for truckerseditor’s note)”.
But these few positive signs fail to offset the uncertainty that Brexit has sown over the British economy from the start. “The reason why the UK is really bad, and the consequences of Brexit even stronger, is that there has been a lot of economic uncertainty since the referendum (in June 2016)”, analyzes Catherine Coron. “Between that time and the time when Brexit was actually enacted, we had a lot of time. Economic players in the markets, who need to anticipate, couldn’t forecast because they didn’t know where the British economy was.”
For the moment, the British economy seems to be permanently affected -in the short and medium term- by Brexit. In addition, the economic outlook of the Organization for Economic Co-operation and Development (OECD) does not invite optimism for the next two years: according to it, the United Kingdom should be the least efficient country among the world’s leading economies, apart from Russia, with a forecast that GDP will decrease by 0.4% in 2023 and increase by 0.2% in 2024.
*Article adapted from its original in French
