Brexit predictions, analysed.
22 February, 2024
Three years passed since the United Kingdom actually withdrew from the European Union, and eight years since the Brexit referendum had taken place.
We revisit this historic decision and see how it affected the British economy and society. Using the latest data and analysis from a broad range of sources, we asses which side gave more accurate predictions on the consequences of the withdrawal.
Brexit referendum
Vote Leave is the campaigning organisation supporting the decision to “Leave” the EU. It was directed by political strategist Dominic Cummings and backed, among others, by then-Mayor of London Boris Johnson, who later served as Prime Minister from 2019 to 2022.
Britain Stronger in Europe advocacy group led the campaign to “Remain”. It was backed by then-Prime Minister David Cameron, who initiated the Brexit referendum in an attempt to settle the United Kingdom’s position within it and resigned after the public voted to Leave.
Many organisations joined the effort and supported one of the sides. Campaigners have used various influence tactics from appeal to emotions to data-based arguments.
Part of the strategy of both camps was to instill fear in the voters about the consequences of the opposite choice – dubbed "Project Fear" by the media and the public, as it became a common term to describe the exaggerated claims and predictions made by the campaigners.
Remainers suggested that leaving the EU would quickly cause a recession, a loss of millions of jobs and a steep rise in food prices, while Leavers argued that staying in the EU would lead to an influx of immigrants and loss of sovereignty.
Some claims were based on dubious sources, cherry-picked data, or were just speculative scenarios, challenged and debunked by experts and fact-checking organisations both at the time and since.
The impact of these claims on the public opinion was confusion, uncertainty and anxiety among the voters, who had to make a complex and irreversible decision with limited and conflicting information.
Other arguments were based on assessing the past. For example, the Remain camp highlighted the benefits of the EU, such as free movement of people, goods and services, access to the single market, protection of human rights and environmental standards, scientific cooperation and participation in various EU programs and agencies.
On the other hand, the Leave camp emphasised the drawbacks of the EU membership, such as loss of control over the laws, borders and budgets, regulations imposed by the EU, and alleged lack of democracy and accountability in the EU institutions.
The London School of Economics and Political Science created a library of campaign materials, mostly leaflets, which have been used in the build-up to the referendum, some of them illustrate this report.
Most of these arguments and claims were fact-checked or at least discussed back in 2016. However, predictions were obviously more difficult to analyse, and this still is not an easy task today.
We compiled predictions made by both camps in their official materials, including archived versions of the websites and the aforementioned leaflets.
Brexit predictions
It is very hard to isolate the impact of Brexit from other factors when it comes to assessing predictions.
Since the Brexit referendum on June 23, 2016, major global events such as the pandemic and the war in Ukraine had a particularly big impact on markers and economies across the world, distorting the effect of Brexit itself.
Moreover, the unexpectedly long and complicated withdrawal process was not anticipated by any side, making it harder to judge their predictions.
For some effects, it may still be too early – the United Kingdom left the EU on January 31, 2020, but remained in the transition period until the end of 2020, during which it followed the EU rules and regulations.
The UK and the EU reached a trade and cooperation agreement on December 24, 2020, which came into force on January 1, and established the new terms of their relationship.
However, there are still many unresolved issues, such as the implementation of the Northern Ireland Protocol, which is a still ongoing complex political dispute over how the borders between the UK, the Republic of Ireland and Northern Ireland should be governed.
Our focus today is on assessing the shorter-term specific predictions made by official campaigners.
In the next section we draw on the data and conclusions reached by the Office for Budget Responsibility, The Policy Institute at King’s College London and The Centre for Economic Policy Research (CEPR), link to which you will find in the Resources section.
Employment
The UK is short of 1.8 million jobs in 2023 due to consequences of Brexit, based on existing data and pre-Brexit trends, Cambridge Econometrics estimated, and this number is expected to reach nearly 3 million by 2035.
There are 330,000 fewer foreign workers in the UK in 2023, that considers the increasing number non-EU foreign workers.
Specifically, jobs in the steel industry dropped by a third since the referendum, as the British steel industry was in a huge crisis post-Brexit and required governmental assistance. In 2016 there were around 32,000 people working in the British steel industry, by 2023 only 21,180 remained.
There were more factors at play than Brexit itself, including predatory lending by a private equity firm and fluctuations in global demand for steel, however, this is still a blow to the Leave campaign predictions.
Industries
In fishing, the results were mixed, UK reached the higher fishing quotas promised by Leavers, but some people in the industry felt betrayed, while overall output remained stagnant.
The negotiations with the EU were difficult and ended much closer to the EU proposition than the UK's demands, especially on reducing EU catches in British waters.
Gross value added of the manufacturing sector has increased over the years but did not reach the promised increase of £45 billion.
Nevertheless, manufacturing stayed relatively strong through Brexit and the pandemic and continues to grow as of today.
The British farming industry struggled over the past years, partly because of the workforce shortages and cuts of subsidies.
However, it is starting to slowly recover, reaching almost £8 million in income, which is much higher than during the pre-Brexit time.
British economy and public spending
The British economy lost around 5.5% of GDP, over £120 billion, as a result of Brexit alone, modern estimates suggest.
The UK could have received £114 billion more in investment by staying in Europe, or a third of the current total.
This suggests that the economic underperformance was largely a result of the created uncertainty and disrupted investor confidence.
Overall public spending increased since 2016, and further since 2020.
While there were some cuts in certain programs like foreign aid, all major expenditures stayed level or increased, especially during the pandemic, resulting in a huge budget deficit of £240 billion in 2021.
Public services saw a lot of problems since 2016, especially the NHS in the wake of COVID-19, as the waiting times for patients dramatically increased.
Experts generally attribute this problem to long-term underinvestment in the NHS, rather than Brexit itself.
However, a major argument of the Leave campaign was that the money sent to the EU could be funnelled into the NHS instead.
We may expect some cuts in the future, but so far it does not seem that anything close to the estimated £40 billion in cuts can happen by 2030.
Immigration
The effect of Brexit was to drastically reduce the amount of migrants from the EU.
From 282,000 net gain in 2016, Britain now has a net loss of people to the EU of 51,000 per year, while EU citizens now constitute the majority of arrivals who were refused entry at the UK border.
Around 7.5 million EU citizens applied for the EU Settlement Scheme since 2016.
Meanwhile, the amount of non-EU migrants into the UK rocketed in 2022 and 2023, a year after the effective Brexit.
However, this should not necessarily be regarded as "the new normal", as the increase is driven by visa schemes for refugees from Ukraine and Hong Kong, as well as an influx of international students and healthcare workers.
Brexit effect on an average household
One of the most debated topics during the campaign was how much can Brexit give (or cost) an average British household.
Many economics experts claimed that Brexit would have a negative impact on households, arguing that leaving the EU would lead to higher tariffs, lower incomes and weaker currency.
However, not everyone agreed with these forecasts and some supporters of Brexit claimed that leaving the EU would actually lower household costs by reducing regulations, increasing competition and strengthening trade deals.
The specific prediction varied from leaflet to leaflet. Overall, we find “Leave” campaign to predict a £400 to £933 increase in household income from Brexit, while “Remain” predicted a loss of £450 to around £4000 per household.
Analysis done by Cambridge Econometrics found that by 2023 Brexit contributed to a loss of £870 per household.
While estimates vary from £210 to over £1000, the studies tend to agree that the losses associated with Brexit are compounding over time.
Conclusion
What we can learn from this is that predicting the future is not an easy task, and that we should be wary of anyone who claims to have a clear vision of what will happen.
As we noted at the beginning, Brexit is not a single event but a process that will continue to unfold and affect the UK, the EU and the rest of the world in various ways.
Today, experts agree that Brexit had an overall negative effect on the economy, particularly through diminished investment and investor confidence.
The Remain campaign did a fairly good job at predicting these overall negative effects.
It is also true that these effects are expected to compound and worsen further over time.
However, some benefits highlighted by the Leave campaign, especially to do with sovereignty, may be harder to quantify and take longer to become apparent.
For example, the war in Ukraine showed Britain’s ability to make important geopolitical decisions, such as supplying military aid to Ukraine, with greater independence from the EU.
In addition, industries like farming and manufacturing showed some good growth recently and may strengthen the retrospective case for Brexit in the coming years.
Brexit was and remains a divisive topic, affecting many families directly, but it also challenged us to think more critically, taught us to question wild claims and predictions, especially if they appeal to our emotions.
Author: Patryk Grazewicz
Editor: Anton Kutuzov
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