According to a new study, Brexit has harmed Britain’s competitiveness, reduced productivity and left the average worker poorer than it would otherwise be.
The Resolution Foundation said leaving the EU has reduced the openness and competitiveness of the British economy.
And this goes further, saying that it has also led to an increase in the cost of living and a drop in the level of business investment.
The report, in collaboration with the London School of Economics, said it was all the result of a “devaluation of the inflation jump” after Brexit.
However, the new post-Brexit trade rules, which came into force in January 2021, unexpectedly did not lead to the steady decline in British exports to the EU that many had predicted, although EU imports fell faster than others. world, the study suggests.
It says the UK has experienced an 8% drop in trade openness – trade as part of economic output – since 2019, losing market share to three of its largest non-EU markets in 2021. ., USA, Canada and Japan.
The full effect of the Trade and Cooperation Agreement will take years to feel, but moving to a more closed economy, the authors say, will make the UK less competitive, which will reduce productivity and real wages, it is predicted.
The study estimates that labor productivity will fall by 1.3% by the end of the decade from changes in trade rules alone, which will contribute to lower wage growth, with real wages set at £ 470 per worker. lower each year on average than it would otherwise be.
Severely affected northeast
Production in the UK’s relatively small but high-profile fishing industry – many of whose members strongly advocated Brexit – is expected to fall by 30% and some workers will face “painful adjustments”, the foundation said.
The report adds that the Northeast is expected to be hit hardest by Brexit, as its companies rely heavily on exports to the EU.
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Sophie Hale, chief economist at the Resolution Foundation, said: “Brexit is the biggest change in Britain’s economic relations with the rest of the world in half a century.
“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 them did not happen, and the second seems unlikely to do so. 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.
Not just dental problems
“Some sectors – including fisheries – are still facing significant changes in the coming years, but the overall nature of services to the UK economy will remain largely unaffected.
The British fishing industry is likely to shrink by 30% due to difficulties in exporting fresh catches to EU customers, the report said.
Hillary Benn, a Labor MP and co-organizer of the UK Trade and Business Committee, said the Brexit government agreement “makes businesses and consumers poorer at a time when people up and down the country are struggling to make ends meet” .
He said the report proved that these were not just “teething problems” but “a long-term economic problem” and called on the minister to reconsider the deal.
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