Concordia

Concordia Winter 2021

Brexit

“Overall, the Office for Budget

Responsibility expect the long-term impact of Brexit will be that the UK economy is 4% smaller than it might otherwise have been.”

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but it will likely be spread over a long period (a decade or more). In order to judge the political impact of this, the real question is to what extent people will feel the impact in their pockets and associate that impact with Brexit. This is where the context of the pandemic once again confuses things. Right now, we are seeing global supply chain problems largely due to a quicker than expected rebound in demand for goods and a sluggish pick up in supply causing prices to spike throughout the supply chain. In the UK the additional changes from Brexit have exacerbated some of these challenges, such as through a shortage of certain workers, e.g. HGV drivers. But of course, with the huge swings in economic activity it is hard to know how much of this people will attribute to Brexit and how much to Covid, or even in reality how much is down to either. Furthermore, despite all of this, the UK economy is forecast to grow at 6.5% this year and 6% next. As such, it is entirely possible that people don’t perceive the impact to be as large as it might in reality be – it is in the end a somewhat hard to estimate counterfactual. There is no doubt that Brexit is going to continue to be a fault line within UK politics for some time to come. But with the exact economic impact still unclear and how voters will respond to and perceive it even less clear, it may not develop in the way many people expect and will certainly not be confined to our existing preconceptions of it.

again to provide services. My sector of Professional and Business Services is a good example of this. Since the pandemic the number of consultants or lawyers, for example, providing fly in/out services in another country has dropped to near zero. It is all done virtually now. Of course, that change may prove to be a permanent one, making it even harder to truly disentangle the impact of Brexit on services trade from those as a result of the pandemic. Clearly then, the picture is a mixed one and hard to fully judge yet. As you would expect, the impact of putting up new trade barriers with our nearest and largest trading partner is negative for trade. But it has so far probably been a bit less negative than expected, at least in terms of exports. Overall, the Office for Budget Responsibility expect the long-term impact of Brexit will be that the UK economy is 4% smaller than it might otherwise have been. In the scheme of the UK’s long-term growth rates this is of course a significant impact,