A Decade Later: How Brexit Has Changed Britain's Economy
Key Economic Impacts of Brexit
By Andy Bruce, Harry Robertson, Dhara Ranasinghe and Grant Smith
LONDON, June 23 (Reuters) - Britain's vote to leave the European Union in 2016 has acted as a persistent drag on its economy, compounding some of the deep-seated structural problems behind the push for Brexit.
From inflation to financial services, here are some indicators that help tell the story of the decade that followed.
GDP Growth Per Capita
Economists mostly agree that Brexit has damaged Britain's economic performance, although separating its impact from that of the COVID-19 pandemic, which struck just as Britain completed its departure from the EU, is difficult.
Britain ranks second-bottom among the Group of Seven (G7) advanced economies for per-capita economic growth, ahead of only manufacturing-heavy Germany, which has struggled to adapt to a shifting global trade environment.
Successive governments have failed to meaningfully lift Britain's economic performance, which remains marked by stop-start growth and weak long-term productivity growth.
Brexit supporters say Britain's independence from the EU will give it flexibility in the long run, while the worst-case predictions for the economic fallout did not materialise.
Some sectors have fared well — notably fintech, life sciences and AI, where Britain has maintained a strong global position.
But economists argue that even these strengths have underperformed what might have been expected, held back by the same investment weakness, political instability and trade friction that have weighed on the broader economy.
Inflation
Britain has seen more inflation than any other Western European country apart from Austria since the Brexit vote, with consumer prices up 41.4% as of May 2026, official data shows.
While initially pinned on one-off events like sterling's post-referendum depreciation or Russia's Ukraine invasion, the failure to control inflation has become a deep-seated problem.
Adam Posen, an ex-Bank of England rate-setter and president of the Peterson Institute for International Economics think tank in Washington, D.C., said Britain had become structurally inflation-prone through weak economic governance — political instability, fiscal fragility and weak productivity growth.
"In a world where the U.S. is not providing global economic insurance, a UK that is neither in Europe nor fully with the U.S. is a small, open economy in a fundamentally more exposed position than it's been for decades. Brexit reinforces that," Posen said.
Financial Services
Loss of European Dominance
In 2015, Britain's financial services exports dwarfed those of France, Germany, Ireland, the Netherlands and Italy combined. As of 2024, those five countries had collectively overtaken the UK, showing how Brexit has diluted London's European dominance.
Sector Performance
Between 2015 and 2025, the economic output of Britain's financial services sector fell by 27%, and it has lost market share in 10 out of 12 categories of international finance, research firm New Financial said.
London's Position
London remains the continent's dominant financial services centre and the biggest hub for trade in the almost $10 trillion-a-day global currency markets.
Business Investment
Years of uncertainty over Britain's post-Brexit trade terms depressed business investment, which stands only around 12% higher than its level of mid-2016, compared with 23% higher in France and 48% in the United States. Germany has fared worse than Britain, with growth of only 1% due to its poor economic performance.
Bonds
Volatility and Safe Haven Status
British government bonds have been more volatile than other debt issued by G7 countries, measured by the 10-year standard deviation of benchmark 10-year bonds.
That has contributed to the loss of gilts' "safe haven" status among investors.
Britain's poor inflation record has boosted interest rate expectations, reflected in the high rates of return offered by UK debt that add to financing pressures.
Political Instability and Market Reactions
Keir Starmer's announcement on Monday that he will quit as prime minister, in the same week as the Brexit referendum anniversary, highlights the fragile political backdrop, with Britain set to get its seventh leader in 10 years.
Bond market frailties were also laid bare during the 2022 gilts crisis when the budget plans of Liz Truss sparked a rout that forced the BoE to intervene and the then prime minister and her finance minister to resign.
Sterling
Currency Performance
Britain's pound is some 10% weaker against the dollar and euro versus where it was before the 2016 vote. That has contributed to increased import costs, adding to inflation troubles at a time when Britain has also grappled with an energy shock unleashed first by Russia's invasion of Ukraine in 2022 and more recently with the Iran war. Sterling has been susceptible to political instability and hit a record low against the dollar during the 2022 mini-budget crisis.
Policy Risk and Reserve Status
"Sterling has probably offered a better yield than many other major currencies but generally hasn't performed as well as that yield would suggest, which does suggest that there's a policy risk premium being built up," said Michael Metcalfe, head of macro strategy at State Street Markets. Questions have resurfaced over sterling's reserve currency standing, especially amid renewed concerns over UK debt levels. The pound remains the world's fourth most actively traded currency, although its share has fallen sharply, the latest Bank for International Settlements FX survey shows.
Recent Resilience
Sterling has proved more resilient to political risks this year, however, with analysts pointing to slightly better economic conditions.
Stocks
Market Performance
An investor in UK domestic mid-cap stocks, measured by the FTSE 250, would have lost 2% in real terms since the Brexit vote, against inflation-adjusted gains of 13% in France and 19% in Ger
