The headline costs of Brexit

This week the UK Government’s spending watchdog, the National Audit Office, revealed that the new post-Brexit border checks, introduced in April this year after repeated delays, will cost the public purse an eye-watering £4.7 billion. 

On top of this, they reported that HMRC estimates that the extra paperwork involved in these checks will cost UK importers and exporters an additional £7.5bn per year.

These are just the latest entries in a long list of how Brexit is hitting the UK economy and public finances, so we thought it was time for an explainer.

Now, counting the cost of Brexit could fill a library but here are the answers to all the headline questions: What is Brexit costing us? What impact is it having on businesses, consumers and public services? And is there any way to undo the damage?

What is the cost of Brexit so far?

Ultimately, there is almost no way for us to know the true cost of Brexit. For example, we will never know exactly how many international companies decided to pass on the UK for investment because we are now outside the largest single market in the world or which emerging UK musician wasn't given the opportunity to tour in Europe after freedom of movement ended. 

However, academics and financial institutions have modelled the impact based on how the UK has performed relative to similar economies. They have calculated the annual cost per year both to the UK economy and to the public money for things like the NHS and schools. 

What is the cost of Brexit to the UK economy?

Analysis  by American bank Goldman Sachs published in February 2024  found that Brexit is directly responsible for the UK economy growing 5% less since the vote in 2016. Bank of England policymaker Jonathan Haskel as said that’s around £1,000 per household. 

What is the cost of Brexit to UK public finances?

The size of the economy directly impacts the amount of money the Government has to spend on public services. Analysis from the Centre for European Reform found that between 2021 and 2022, the shortfall in economic performance led to a shortfall in tax revenue worth around £40billion.

Did Brexit cause the cost of living crisis?

Brexit did not cause the cost of living crisis but it almost certainly made it worse for people living in the UK.  Countries around the world saw high inflation following the Covid pandemic and invasion of Ukraine, but researchers from the London School of Economics found that the additional paperwork from Brexit on food products means the typical UK household is paying an additional £250 per year for their groceries. Food inflation was one of the key drivers of the cost of living crisis.

How has Brexit impacted businesses?

Brexit has created countless issues impacting almost every sector in the UK economy. It has led to job losses in some and labour shortages in others. Uncertainty about new rules and new trade deals has increased costs and reduced investment. 

The UK Trade and Business Commission of industry leaders and MPs from all parties undertook the most comprehensive, insightful, in-depth assessment of post Brexit trading conditions via sector by sector live evidence sessions.

How has Brexit impacted public services?

Along with the shortfall in public finances following Brexit, meaning less money for public services, Brexit has had a significant impact on the UK’s ability to retain vital public sector workers. For example, following the Brexit vote more than 4,000 European doctors working in the NHS decided to leave according to analysis by the Nuffield Trust health thinktank .

What are the benefits of Brexit?

Few if any and certainly nowhere commensurate to its negative impacts. Contrary to what was promised in the 2016 referendum, proponents of Brexit have since suggested that the economic benefits of Brexit could take as long as 50 years to materialise.

How do we fix the damage of Brexit?

Fixing the problems Britain faces after Brexit will be the work of many years but Best for Britain helped is campaigning for 114 evidence based recommendations that can begin to repair some of the damage. They include things like beneficial regulatory alignment and a reciprocal Youth Mobility Scheme.  Some of our recommendations have already been adopted such as the reentry of the UK into the Horizon Europe funding programme for research and innovation.