LONDON (Reuters) – Britain has become a more closed economy due to Brexit, with adverse long-term effects on productivity and wages, which will leave the average worker 470 pounds ($577) a year poorer by the end of the decade. Wednesday study forecast.
The report was written by associate professor at the London School of Economics Swati Dhingra – who will join the Bank of England’s monetary policy committee in August – and researchers from Resolutions, Reuters reports.
The COVID-19 pandemic, which struck just after Britain left the European Union in January 2020, has complicated the task of analyzing the impact of Brexit.
The researchers said the new post-Brexit trade rules, which unexpectedly came into force in January 2021, have not led to a sustained decline in British trade with the EU, compared to that with the rest of the world.
Sophie Hill, an economist at Resolutions, said: “Instead, Brexit has had a more pervasive effect by reducing the UK’s competitiveness and openness to trade with a wide range of countries. This will ultimately reduce productivity and real wages. for workers, too.”
Britain does not face tariffs on exports of goods to the EU, but there are larger regulatory barriers.
The net effect of these factors would reduce productivity across the economy by 1.3% by 2030 compared to an unchanged business relationship – which translates to a real 1.8% reduction in annual wages of £470 per worker.
These figures do not include any assessment of the impact of changing immigration rules.
The impact on some sectors will be more pronounced. The report said Britain’s small but high-profile fishing industry – many of whose members have staunchly advocated Brexit – is likely to shrink by 30% due to difficulties exporting its fresh catch to EU customers.
By contrast, although highly regulated professional services such as finance, insurance and law will find it more difficult to serve EU clients, their share in the UK economy is likely to fall by just 0.3 percentage points to 20.2%.