What do independent economic assessments say about Brexit's impact on UK GDP, investment, and productivity?
Executive summary
Independent academic and official assessments converge on a clear negative signal: Brexit has materially reduced UK GDP, sharply depressed business investment, and modestly but meaningfully dented productivity—though the size and timing of those hits vary across studies and depend on assumptions about counterfactual growth and other shocks (pandemic, energy crisis) [1] [2] [3].
1. What the major independent studies say about GDP
Several heavyweight, independent analyses place the cumulative Brexit hit to UK GDP by the mid‑2020s in the single digits: the NBER/Stanford team estimate GDP was 6–8% lower by 2025 relative to a no‑Brexit counterfactual [2] [4], CEPR’s review judges the best estimate to date at roughly 2–3% but acknowledges a plausible wider range and that more of the damage may be yet to materialise [1], while the Office for Budget Responsibility uses long‑run scenarios that imply multi‑percent losses to potential output driven by reduced trade intensity and productivity [3] [5].
2. Investment: the clearest casualty
Independent work consistently flags business investment as the most strongly affected margin: authors find investment 12–18% below where it would otherwise be by 2025 in several macro‑micro blended studies (NBER/Stanford and affiliated work) [2] [4], CEPR and OBR commentary also point to substantially weaker investment growth since 2016 and attribute much of the UK’s underperformance to Brexit‑related uncertainty and new frictions [1] [3]. Regional and sectoral modelling—such as the Greater London Authority analysis—projects even larger cumulative shortfalls over a longer horizon, with scenarios showing investment more than 30% lower by 2035 under some assumptions [6].
3. Productivity: modest but persistent losses and channels
Most independent assessments link weaker investment and reduced trade intensity to slower productivity growth: the NBER/Stanford central results put labour productivity about 3–4% below the counterfactual by 2025 [2] [4], the OBR’s modelling assumes a 4% reduction in potential productivity over 15 years tied to lower trade intensity [5], and CEPR cites work suggesting productivity/output could be a little over 1% lower from investment channels alone while allowing for wider ranges [1]. The mechanisms identified across studies are elevated and persistent uncertainty, higher trade costs and bureaucracy, diverted management time, and increased misallocation of capital and talent away from growth activities [2] [4].
4. Where independent estimates diverge and why
Differences across independent assessments reflect methodological choices: whether authors rely on macro‑comparators across advanced economies or firm‑level microdata, how they net out unrelated shocks (COVID, global supply chains, energy shock), and the timescale for trade‑productivity pass‑through (short vs. 15 years) [7] [2] [5]. CEPR leans to a more modest realised hit so far (≈2–3%) while NBER/Stanford and some think‑tank work find larger cumulative losses (≈6–8% by 2025), and long‑horizon scenario studies (OBR, GLA modelling) emphasize further impacts that may accumulate over a decade or more [1] [2] [6] [3].
5. Limits of current evidence and implicit agendas
Independent papers are transparent about uncertainty but not immune to implicit framing: counterfactual construction choices can embed normative views about where the UK would have traded or invested absent Brexit, and think‑tank or regional reports may stress local losses to press for policy responses [6] [3]. Several studies acknowledge that higher non‑EU migration and post‑pandemic shocks complicate attribution and that some estimates likely understate or overstate future dynamic adjustments [3] [8].
6. Bottom line and policy implications
Taken together, independent assessments paint a consistent picture: Brexit has reduced UK GDP (estimates commonly span roughly 2–8% to date, with central academic estimates clustering around 6–8% by 2025), slashed business investment (commonly estimated down 12–18% by mid‑2020s and in some scenarios far larger over decades), and trimmed productivity (roughly 3–4% in many studies and up to 4% in OBR scenarios), and they identify trade frictions, uncertainty and misallocation as core drivers—facts that point to policy levers on trade facilitation, investment incentives and productivity reforms if the UK seeks to narrow the gap with its peers [2] [4] [1] [3].