The impact of Brexit, in charts: How has leaving the EU affected Britain?

John Springford of the CER, tries to isolate the effect of Brexit by constructing a phantom country that tracked Britain’s performance before 2016’s referendum result. By using an algorithm to pick from a set of 22 countries rather than just selecting, say, a few economies of a similar size, he builds a plausible description of Britain’s path had it not voted to leave the eu (see chart 1). He estimates that by the second quarter of 2022, Brexit had hit gdp by as much as 6% relative to this counterfactual. Using the same method, he reckons that Brexit dragged down investment by 11%.

The effects on trade are a little more complicated. The latest data suggest that Brexit hasn’t had much effect on trade in services at all (though all estimates should come with the caveat that services trade is notoriously hard to measure). But it appears that Brexit had depressed Britain’s trade in goods by 7% by the second quarter of 2022.

These numbers are not gospel. Critics of Mr Springford’s model say that some of its comparator countries unfairly disadvantage Britain: Australia and New Zealand were more able to close their borders during the pandemic and avoid the worst effects of lockdowns; America became an energy exporter in 2019. They also point out that Britain’s productivity problem predated Brexit: it was already the worst performer on investment among g7 countries during the decade before the referendum. Mr Springford has argued in turn that his approach is better than cherrypicking countries based on rules of thumb. Whatever the precise scale of the hit, the overall message is clear: Brexit has made a bad situation worse.