Brexit cost the UK billions in lost trade and tax revenues, research finds

Centre for European Reform figures show that by the end of last year, the economy was 5% - or £31 billion - smaller than it would have been if the UK had stayed in the EU.

ITV News Business and Economics Editor Joel Hills reports.

It’s five o’clock in the morning and the auction at Brixham’s fish market is underway. Ian Perkes is on the hunt for monkfish, scallops, turbot and cuttlefish to send to his customers, most of whom are based in the European Union. Nowadays, to export fish to the EU you need to fill in forms. Ian calculates that the requirement to complete customs declarations, export health certificates and VAT declarations are costing his business £300 a day. He shows me a picture of Boris Johnson who paid a visit to the fish market in August 2019, less that six months before the UK left the EU’s custom’s union and its single market.

Ian Perkes with Boris Johnson in 2019 Credit: Ian Perkes

“He told me my business would boom,” Ian says.

Brexit has meant we have to work harder for less money, we have to employ extra staff for the admin. “I was the first one to put my hands up to say I’m sorry I voted to come out of Europe. I really wish we were still in it.”

The decision to leave the European Union has undoubtedly delivered greater political freedoms. The UK has been able to enact immigration reforms and a speedy vaccine rollout during the Covid-19 pandemic. The economic benefits are far harder to identity, indeed the economic damage Brexit has caused is becoming clearer. The Centre for European Reform (CER) has modelled the economic performance of a UK that remained in the EU - using data from countries like the US, Germany, New Zealand, Norway and Australia - whose performance was similar to ours before Brexit.

It then compared this with the real performance of the UK economy since the referendum six years ago. The CER concludes that by the end of last year our economy was 5.2%, or £31 billion, smaller than it would have been had we stayed in the EU. Investment by businesses and government was 13.7% lower; goods trade 13.6% lower; although services trade was 7.9% higher. “Disentangling the economic effects of Brexit and Covid-19 is difficult. But now that most advanced economies have surpassed their pre-pandemic level of output, we have a basis of comparison for the UK economy,” says John Springford, Deputy Director at the CER.

Mr Springford explains why he believes the UK's economic issues are due to Brexit and not Covid

Springford argues that a sizeable gap between the UK and his “doppelgänger” economy had opened up before the pandemic struck and that by the end of 2021 most economies had reopened and the worst of the pandemic has passed. “The UK lifted its restrictions about six weeks earlier than a lot of European countries that I compare the UK to and it had a much more successful vaccination drive, you would expect [UK GDP] to have recovered faster but it’s is still quite a lot down”. The CER’s analysis shows that Brexit has cost the UK billions of pounds in lost trade, lost investment and lost tax revenues. That’s money the country could really do with at a time of rising national debt and falling living standards. At the Conservative Party Conservative Conference last October, the prime minister promised the UK was on the way to becoming a high wage, high productivity, low tax economy. The evidence suggests that Brexit, so far, is delivering the opposite. “If the economy is 5% smaller than it would otherwise have been then we are all 5% poorer. It also means that taxes have to rise to fund the same quality of public services that we had before,” says Springford.

“That’s the backdrop to the chancellor’s decision to raise the overall tax [burden] to levels that we haven’t seen since the 1960s”.

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Back in Brixham, which voted overwhelmingly in favour of leaving the EU, not everyone shares Ian Perkes' sense of remorse.For Karon Morris, who sells seafood on the seafront, the priority was political independence not economic growth.“We are taking backing responsibility for our country and for our laws, there were always going to be [economic] teething problems,” she told me.

“How long were we in Europe? You’ve got to expect some disruption.”The UK economy has been hit by a series of shocks in recent years. The pandemic and the war in Ukraine are the main causes of the brutal cost of living squeeze we now face.But the economic costs of Brexit are also becoming clearer and harder for the government to dismiss.For now, there’s little sign of widespread disappointment among those who believed in the vision Boris Johnson and other sold them six years ago. Ian Perkes appears to be in the minority.