Brexit has left the UK economy around 4% smaller than it would otherwise have been, with employment lower and prices modestly higher, according to a Deutsche Bank report marking the 10th anniversary of the vote to leave the European Union. Using a synthetic control model, the report estimated that Brexit has reduced employment by around 2%, or roughly 685,000 jobs, while lifting consumer prices by about 0.7% relative to a scenario in which Britain had remained in the EU. Much of the economic divergence emerged after the pandemic and the implementation of the UK-EU Trade and Cooperation Agreement in 2021, as earlier years were supported by monetary stimulus, a weaker pound, higher immigration, and inventory stockpiling. Business investment was identified as one of the weakest areas, with uncertainty weighing on corporate spending, while goods exports to the EU underperformed many G7 peers due to new trade barriers. The report also highlighted benefits including greater regulatory flexibility, an independent trade policy, and a stronger position in artificial intelligence regulation and financial services, and estimated that targeted improvements to the existing trade deal could increase UK GDP by between 0.4% and 0.8% without deeper political integration.
Deutsche Bank AktiengesellschaftDeutsche Bank authored the report; the negative UK economic outlook may weigh on its UK operations, but the report itself is not a direct financial event for the bank.
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