UK leaving the EU – Leaving its economy stranding

By Tomasz Wisniewski|

Published: January 19 2022, 12:38 GMT+0

UK leaving the EU – Leaving its economy stranding

Tags: ,

5 years ago the Brits voted to leave the EU, marking one of the most influential decisions for the United Kingdom. After this, the country entered an unending phase of economic unrest, starting with an 8% drop in the currency on the first day after the decision.

The UK economy went from the highest peak to the lowest end several times over the last years, powered by the political shift in the country that saw this step beneficial for the wellbeing of the British people who favored this separation.

After a long series of fluctuations swinging every economic indicator, the question is – was it the right decision? What do the numbers show for the UK? Let’s take a look at the United Kingdom in figures.

The Brexit Referendum (2016-2018)

The then UK Prime Minister David Cameron has promised to hold a referendum if the conservative party would win by the majority in the 2015 elections.

The referendum would include renegotiating EU membership terms that concerned the conservative party and the UK citizens, who wanted to have better control over the immigration movement in the country, political sovereignty, economic freedom, the rule of the people, and most importantly the English nationalism.

The release of the referendum results entailed that 51.89% of the population favored a departure from the European Union, while 48.11% wanted to remain a member of the EU.

This has spurred a series of economic disturbances in the UK, which has left the door open for speculations to circulate since the future became unknown for the people and investors alike.

Despite the economic decline compared to 2015, the first half of 2016 was quite stable, up until the date when the results of the referendum were announced.

The value of the Pounds

The GBP was performing fairly well against the US Dollars and the Euro until June-2016.

The GBP/EUR was fluctuating around 1.3 Euro. However, that has changed dramatically as the outcomes of the vote were known, dragging the value of the GBP down to 1.19 Euros in one day, and later closing the year at 1.17

Similarly against the US Dollars, the exchange rate of GBP/USD was floating around 1.43 USD in the first half of 2016, which later fell down to 1.29 after 2 weeks after the referendum, and ended the year at 1.23. 

These changes are triggered by the fact that the Sterling pound became less attractive for investors since the separation from the EU resulted in changes in the trade between the UK and the EU and the US, therefore changes in the rules of the demand and supply for the GBP.

However, high volatility was also created because people had contradictory opinions about the upcoming changes, all these speculations created a sensitive currency that can fluctuate heavily with any simple news or event.

Unemployment rates

The unemployment rates were one of the shocking indicators that went totally opposite to the many estimations of the economic experts who predicted the unemployment rates to jump as a result of the Brexit referendum.

However, the unemployment rates remained solid as they continued to keep under 5%, specifically 4.9% in 2016, and 4.4% in 2017, before hitting a record low in 2019 at 3.8%.

The huge drop in the unemployment rate year by year was mostly due to the fact that many non-UK workers left the country because Brexit cast an unknown future for the workforce flow between Europe and the UK, leaving job opportunities for UK workers to take over.

Add to that, when non-UK workers exited the workforce count in the UK and more UK nationals replaced the departing non-UK workers, the employment numbers were supposed to shoot up on the charts.

The impact on the employment status in the country varies across different industries, specifically when we measure that a year after the referendum was conducted. 

Agriculture, forestry, and fishing – Witnessed an increase of 8.7% in employment.

Mining – increased by 4.5% in employment.

Transport and storage – saw a 4.6% increase in employment.

Water supply & waste management – had a 4.2% increase in employment

This means that mainly the service sector and the hand labor sector saw growth in employment. On the other hand, there were two sectors that were negatively impacted by these economic shifts.

Real estate activities – dropped -5.9% in employment.

Household employment – dropped -15.5% in employment.


For the Gross Domestic Product, a Brexit means the non-UK workforce would leave the country, trade agreements between the UK and non-UK companies would also be affected because new trade agreements might be needed, new customs tax would be enforced. 

That would disrupt the national output in the UK, and hence slow down the GDP growth in the country.

In the beginning, and after the referendum results were known, impacts on the GDP were not directly shown, as the transition phase would take a few years and manufacturers kept operating under the same regulations.

The transition window until 31, December 2019 meant that British manufacturers could operate under the current trading agreements until 2020, though their best bet would be if the Prime minister penned a satisfactory trading agreement with the EU leaders.

However, the uncertainty associated with the UK leaving Europe would definitely destabilize the national output especially when there was no information on what kind of agreement the UK would secure from the EU prior to its departure.

The year 2016 ended with a growth rate of 1.72% which is considered a drop compared to the 2.63% growth rate of 2015.

GDP per capita

Since the GDP of the country was highly fluctuating during the Brexit years, it is reasonable to suggest that the GDP per capita would also destabilize, and studies suggest that the income per British citizen would decrease as a result of Brexit.

The UK citizens usually enjoy a higher GDP per capita compared to EU citizens, however, that could face some changes as the Brexit took place, and the Brexit would cost 1% to 10% of the GDP per capita, which is high depending on the type of agreement the UK would reach with the EU.

The year when the referendum was just announced the GDP per capita was at GBP 31,015 which represents an -8% drop compared to the previous year.


Given the fact that after the referendum, there were yet no changes on the trade agreements, and the GDP was still around its average performance, prices of consumers’ goods did not see much change, and the year 2016 saw a small inflation rate of 0.66%

This is considered fair in comparison to the inflation rates in the US for example, under the fact that the British Pound was still performing well against the major currencies.

That was only before the jump in inflation rate to 2.68% in 2017 when the Sterling Pounds depreciated against major currencies, and the imports to the UK became more expensive and cast expensive prices on the local markets.

Interest rates

Since the financial crisis of 2008-09, the interest rate was kept at 0.5% in an attempt to help the economy recover from the global financial shock.

However the introduction of the EU referendum has changed the prediction about the interest rates, and experts projected the rate to have further cuts to almost 0%

The further cut would be necessary to treat any negative speculations surrounding the EU referendum to separate the UK from the Euro, and to act proactively before any economic recession takes place.

And as expected, the bank of England has introduced new interest rates of 0.25% which were designed to keep the economy growing at a satisfactory level, taking into account the aim to keep the inflation rate around 2%.

Average salary

As the economy was growing on a satisfactory level +1.7%, the unemployment rates started to decrease and the low-interest rates in the country helped the economy recover, which led to improving the wellbeing of the locals.

The average salaries in the UK kept on increasing almost consistently by 2% or 2.5% year after year, and in 2016 the average salary for a full-time employee in the UK was 28,195 GBP.

Government debt

After the global financial crisis of 2008-2009, the government debt in the UK has increased noticeably, and since 2011 the state was borrowing more than 80% of its GDP.

In light of the EU referendum, the public debt amounted to 86.8% of the national output, which is almost the same as previous years.

The introduction of the referendum did not have an instant impact here since it was early to judge the future of the economy until the official exit.

Consumer price index

As a result of the recovery from the 2008 financial crisis, the consumer price index started its downward direction from 2010 all the way to 2015 where it has even gone below 0% over some months.

However, in 2016 despite the small upward movement where the CPI reached 1.6% this rate still is considered not significant, as the economy was recovering and the GDP per capita was also on the rise.

Consumer spending

Consumer confidence and spending kept increasing as the national economy was recovering from the 2008 crisis, and the spending growth rate was up until 2016 when the Brexit referendum was discussed. 

In fact, consumer spending marked one the highest rates as the growth rate was at 3.40% in 2016, but that was soon changed as the aftermath of the referendum started to take place.

Retail sales

The sale of goods and services in the UK was not really affected by the Brexit referendum, it might have slowed down its growth rate which was at 3.4% in 2016.

The referendum did not really affect the manufacturing and retail, because firms knew that there were several years yet for the serious separation to happen, so they kept producing on almost the same level.

The economic growth was part of the fact that the retail sales kept on growing through 2016 and 2017.

UK Stocks

The stock market had one of the most interesting movements along with the Brexit events, starting from the day the referendum results were released.

As soon as the results were known, some companies in the London exchange market lost stock value in a considerable way. The FTSE 100 index lost 200 points in one day just after the results of the referendum were known.

Lloyds bank of the UK has witnessed a stock price loss from 71 GBP to 56 GBP just in 24 hours before drowning again to 50 GBP the week after.

The Royal Bank of Scotland is another great example, its stock price opened at 250 GBP the day of the referendum result release, however, the next day, the stock closed at 205 GBP, and the week after, it sank to 148 GBP.

Taylor Wimpey is another example of companies that lost the most, one of the biggest household building companies in the UK lost 29% of its stock price in one day, from 192 GBP to 136 GBP.

The Separation Negotiations (2018-2020)

The UK prime minister went on the way to shape the path for the United Kingdom after leaving Europe, and a series of negotiations started between Theresa May and the EU president then Jean-Claude Juncker.

The negotiations did not go as planned, as Theresa May came back from Brussels empty-handed most of the time.

Politicians in London were split in their opinion on the outcomes of the discussions with the EU between a hard Brexit or an easy Brexit. 

The negotiations phase took an extended period of time, which has left the door open for speculations to take place. As a result, it caused several financial indicators to fluctuate.

The value of the Pounds

In 2018, when the deadline for the departure was set between the UK and EU, the negotiations kicked off to agree on the terms of the departure.

The value of the British pound was highly tied with the outcomes of the negotiations with the EU because a deal with Europe would set the trade and the tax systems between the two zones.

Thus, if an easy Brexit was the deal, and if the UK would secure some trade and labor agreements before leaving the EU, the British economy would not face any adverse consequences, or at least not of a high impact.

On the other hand, if a hard Brexit was the plan or if Theresa May would not reach an agreement before the deadline, things could be hard for the UK, and the economy would be set on fire.

At the beginning of 2018, there was no plan yet for the withdrawal from the EU, giving the space for traders who relied on trade with foreign partners to plan their business and conduct trading activities which spurred the valuation of the pounds against the USD to 1.43, the same way for GBP/EUR which equaled 1.15. 

However, when the UK started running out of time, and the deadline was quickly approaching, the worst was expected, which was having a hard Brexit or jotting no deal at all with the EU.

No agreement means the return to international trading standards, and UK traders would face heavy trade barriers, foreign tax systems, and delay for their businesses, which would deteriorate the British Pounds against the currency of other partners, which are USD & EUR.

Starting from April 2018, the Sterling Pounds started its fall down and ended the year as low as 1.2 against the US Dollars, and 1.11 against the Euro.

Unemployment rates

In 2018 when the negotiations about Brexit with Europe started taking place, the unemployment rates remained low, almost similar as they were the year before, with small fluctuations between industries, but the overall unemployment rate by the end of 2018 was 3.9%.

That year also witnessed the negotiations between the UK then prime minister Theresa May and Europe to smoothen the exit of the UK from the EU.

The negotiations were focused on the settlement the UK had to pay to the EU as a “divorce bill” as well the working-hand flow between the UK and EU, however, May struggled to reach any kind of agreement with the EU president.

The failure in the agreement did not result in direct unemployment rates changes, as the effects were projected to take place in the coming years.


The prime minister was holding a series of negotiations with their European counterparts which did not see any success or any hint of potential. That left the Brits devastated as the deadline was rapidly approaching, and no sight of any deal was forthcoming.

The lack of any agreement discouraged local manufacturers to operate on the same level, and businesses started to slow down on employment and on production as they were afraid they would not be able to ship their products abroad, or that they would not be able to import any raw materials that are necessary for production.

The GDP grew very tiny during the years 2017 and 2019, as everything was still under speculation waiting for the outcomes of the negotiations with Europe. The growth rate between these years kept on 1.74%, 1.25%, and 1.37% respectively.

The Brexit would cost the UK from its own GDP, and by the end of the 1st quarter of 2019, it was estimated that 2.1% of the GDP would be given away as the cost of the Brexit, which would accumulate for 50 billion GBP.

GDP per capita

The figure dropped since the UK was planning for its departure from Europe, and manufacturers did not really know what was coming ahead.

The news came that Theresa May did not reach an agreement with the EU leaders and that the separation deadline could be postponed, giving some space for manufacturers to give it their maximum capacity of production.

UK companies tried to push their maximum to produce, and when the unemployment rates were low, it meant that UK manufacturers were producing and selling more, which pushed the GDP per capita slightly up to GBP 32,330 or a 4% increase compared to 2016.


The year 2018 witnessed the negotiations series between the UK and Europe, and since there was no new agreement reached, and no hint of any new regulations before the Brexit deadline, the UK firms kept on producing under the same rules.

Local firms kept on importing goods and raw materials for production under the light of the GBP depreciation against major currencies, which led to drawing the prices higher in the local market which pushed the inflation rate high to 2.48% in 2018.

Interest rates

The UK government had one of these possible Brexit scenarios (Easy Brexit – Hard Brexit – No Plan- Chequers plan) as they tried to negotiate with the EU on the way they leave the Eurozone.

Eventually, there was no hope of any kind of agreement, and the EU leaders did not seem to be helpful. Therefore, the bank of London set a plan to recover from the worst-case scenario.

When the negotiations with Europe had started and Theresa May was trying to smooth the divorce from the EU, the negotiations were not fruitful in 2018 and it seemed like a no-deal or a hard Brexit would happen. 

At the same time, the UK economy was running with a low unemployment rate, and with an improving GDP rate – that indicated an economic recovery and that the national economy was performing well, given the fact that GDP per capita was also improving.

The bank of England increased the interest rate to 0.75%, this increase was justified by two reasons:

  • As a preparatory plan if the UK fails to reach any Brexit deal with Europe.
  • As a response to the recovering economy, increase in GDP and the increase in the standards of living.

The national regulators estimated that the population could tolerate such an increase in the interest rate given the fact that GDP per capita was also improving, and people’s income was getting higher as well.

Average salary

Given the fact that the local economy was still performing well with improved national output, a positive GDP growth rate, and low unemployment rates, the salary average kept increasing to 29,559 GBP

The salaries average kept increasing, as did the standards of living for the British people, However, some fears were also rising among the population.

The fear that no deal was sealed with Europe, meant that the UK was going to enter another recession that could storm the whole English economy.

Government debt

In 2018 when the negotiations between the then Prime Minister of the UK and the EU leaders were taking place, the lack of any agreement did not really impact so much national debt.

At the same time when the negotiations were ongoing and the future was quite ambiguous for the UK after Europe, the national debt remained stable at a rate of 85.7%, without any remarkable change.

Consumer price index

In the year 2018 where more negative speculation started to grow, the GBP performed badly against major currencies, causing imported goods to become more expensive, therefore increasing the prices of the local markets.

This had a chain reaction because the currency devaluation caused local market goods and products prices to rise, and therefore increasing the price of the consumers’ basket. The year 2018 witnessed an increase in the consumer price index by 2.1%. 

However, this change might have not been so negative on the population that experienced a rise in the average salary and an increase in the GDP per capita. So UK citizens could afford this increase in consumer goods to some extent.

Consumer spending

This rate started to grow very poorly in the years following the referendum, as different speculations were going around the negotiations between the UK and EU for a Brexit deal.

Despite the fact that the economy was growing and the unemployment rates were at the lowest in 2018, consumer spending grew poorly by 1.43%, probably the skepticism held the population from increasing their spending as they feared the unknown.

Retail sales

As the deadline for Brexit was soon approaching, manufacturers started to produce more. In the light of decreased unemployment rates and a booming economy, retailers managed to keep their sales growth at a positive rate of 4.2%

The increase in prices in the local market did not really hinder the population to spend more, which resulted in increased consumer spending as we saw previously, and therefore increasing the retail sales in the UK.

UK Stocks

In the times when the negotiations with Europe were taking place, the UK stocks generally fluctuate up and down in an insatiable way. The FTSE 100 index started the year 2018 strong with 7770 points, however, it ended the year with poor performance as it lost more than 1000 points and closed the year with 6720 points.

However, not all the companies went off broke in 2018-2019, for example, Unilever company which lost 20% of its stock price in 2018, has compensated for its loss in 2019 as its stock price went from 4,000 GBP to as high as 5,300 GBP before closing the year 2019 at 4,350 GBP.

Tobacco companies were also one of the losers during 2018-2019 as the US regulations imposed restrictions on flavored cigarettes and e-cigarettes, and the British American Tobacco company lost around 50% of its stock price in 2018.

The Brexit Taking Place (2020-today)

February 2020 was the day when the United Kingdom officially left the EU, marking one of the most prominent political and economic changes in the country.

The spread of the Covid-19 virus made it hard for the UK, it led to the closure of businesses, people losing their jobs, and the world economy being slammed heavily.

These have exaggerated the outcomes of Brexit as we see the changes in the following economic indicators.

The value of the Pounds

When the final stage of the withdrawal took place and the UK became officially not part of Europe anymore, the Sterling Pounds went through two main phases.

The departure happened in February 2020, and given the spread of the Covid-19, the economy was stalled and the value of the Sterling Pounds started to sink, reaching new lows.

GBP/EUR = 1.0, and GBP/USD = 1.14

From the 2nd quarter of 2020, the GBP started surging in value against both the EUR and the USD, which was due to the UK efforts to contain the spread of the virus while Europe was heavily struck with the infection, causing its major states to announce a state of emergency.

The UK was already learning how to become self-sufficient, and it has also handled the lockdown and working-from-home effectively in an attempt to keep its economy alive. Europe was struck with the suspension of international trade around the world.

This, besides the 330 billion GBP stimulus package by the bank of England has helped the currency stabilize amidst the pounding crisis, and the British Pound ended the year fairly against other main currencies like GBP/EUR = 1.12, and GBP/USD = 1.36

Unemployment rates

From the second half of 2020 the unemployment rate started to increase which can be explained by two main reasons: 

Firstly, Brexit officially happened and the UK withdrew totally from the EU in February 2020, meaning that the UK is not part of the single labor market anymore. 

Secondly, the spread of the Covid-19 pandemic around the world, where businesses were put on halt and employees were laid off or temporarily suspended from workplaces.

The economy was slammed hard here and we can see that the majority of industries struggled with unemployment, as the unemployment rates were going up in the overall jobs statuses.

Generally, the unemployment rate increased by 2.6% compared to the previous year, and while the agricultural sector saw an increase of 7.3% in employment, other industries faced the following drops.

  • Mining: -9% 
  • Manufacturing: -4.2% 
  • Accommodation & food services: -5.3%
  • Administrative services: -7.9%
  • Entertainment & recreational: -9.6%
  • Household employment: -11%


The Covid-19 pandemic started to spread across the world, the UK exited from Europe in February 2020, all these factors have resulted in worse GDP growth in the UK at -9.79% in 2020.

The decline in the national output was reasonable due to the worldwide crisis where companies ceased their production and employees were sent home, slow down in investment and consumption, and almost every economy around the world was heavily slammed, including the Eurozone which witnessed one of the worst recessions ever.

Estimating the costs of Brexit for the UK, studies show that by the end of 2020, Brexit would cost the nation 4% of the national GDP, or an average of 350 million GBP per week.

GDP Per Capita

The year when the UK has officially separated from Euro, leaving the single market economy and the unified custom tax system, has recorded a -4% drop in the GDP per capita, where a UK citizen had 30,957 GBP on average annually.

This drop was reasonable given the significant impacts of the Covid-19 where the majority of people were either dropped from their jobs or were on temporary leave.

In addition to that, the majority of firms reduced production as they decreased the working hours of their employees, which caused reduced national output, and when we count that per capita, it yielded lower GDP per capita.


When the UK was officially separated from Europe, it was estimated that the inflation rate would shoot up, however, the fact that the same year came with the spread of the Covid-19, has changed a bit in the nature of the inflation rates.

The pandemic outbreak caused devaluation of almost all currencies, especially the ones that represented a trading partner with the UK, like the US and Europe. When the exchange rate was not expensive, the imported goods would not cause the prices of the local market to increase.

Mid-throw the year, when every country closed its borders to curb the spread of the virus, the trading activities were minimized and production of some products was halted, and with the improvement of the GBP, the prices did not see much increase as the inflation rate jumped only a shy 0.85% in 2020.

Interest rates

The year when the UK was officially separated from the EU, and many new regulations were awaited, the spread of the Covid-19 across the whole world led to a crashing economic crisis everywhere.

As a response to the economic recession in the UK, the bank of London has introduced another cut on the interest rate down to 0.1% in 2021 which is the lowest it has ever been.

It was believed that such a drop in the interest rates would ease the effects of the recession, and would make borrowing more affordable for businesses and individuals as they were dealing with the Covid-19 restrictions.

Average Salary

The year when the pandemic struck every economy, add to the fact that the UK has officially exited the EU early in 2020, these factors marked the beginning of an economic recession that dragged down almost every financial indicator in the country, taking the average salaries down with it.

When the national lockdown took place and many businesses ceased operations or decreased their working hours, it was natural that average salaries would drop, as people faced hardship despite the national efforts to ease the crisis.

The year 2021 reported that the average salary for a full-time employee in the UK dropped to 25,971 GBP.

Government debt

In the year when the official separation happened, and the Covid-19 pandemic hit every economy, it was logical for the government to increase its borrowing for many reasons.

One of the main reasons is the increased expenditures on the national healthcare system in the UK, as a response to the infection rates in the UK.

In addition, the Bank of London has released a stimulus package of 150 bn GBP in order to support the national economic growth as businesses and production were hit hard in the country and around the world.

Therefore, with the stagnating national output, the government had to increase its national debt which in 2021 has accounted for almost 105% of the GDP.

Consumer price index

The consumer price index in this year kept on increasing, and with a higher rate, this time by almost 4%. However, it is hard to refer to this rise to any rise in salaries or improved GDP, since this year saw the official withdrawal of the UK from Europe and the spread of the Covid-19.

The national economy suffered from currency devaluation, GDP downslope, and decreased average salaries among the population, at the same time the increased consumer price index marked one of the worst economic crises around the world.

Consumer spending

When the pandemic spread across the country at the same time as the UK separating from Europe, it was reasonable for the population to decrease their spending.

One of the main reasons for the decreased spending, as the rate dipped -10.9%, was that the economy stopped growing at the same rate, unemployment started to increase and people were stuck in their houses.

The foreclosure of some companies and the decreased production of others, led the population to refrain from spending a lot of money, add to that, the restrictions saw everything closed and people did not really have many options to spend on.

Retail sales

The spread of the pandemic would have hindered the retail sales of UK firms, given the fact that Brexit has happened at the beginning of 2020 and that would fairly disrupt the economic activities.

However, the retail sales dropped very little by -0.7% which could have been worse than that. The low-interest rates by the national bank and the existence of eCommerce have contributed to the overall retail sales activity.

The rate kept dropping but at a much lower rate, however, the volume remained more than the retail sales prior to the pandemic +4.2%

UK Stocks

Most of the UK stocks got slammed heavily in 2020, impacted by the spread of the pandemic causing the closure of business and restrictions of movement and trade around the world, in addition to the official separation of the UK from Europe.

The FTSE 100 index of London lost 28% of its value in 3 weeks, falling more than 600 points every week on average at the beginning of 2020.

HSBC Bank was also hit hard in 2020 as it started the year with a stock price of 590 GBP, and sank throughout the year to 280 GBP losing more than 50% of its stock price

Other companies like AstraZeneca went to both radicals in the years 2020 and 2021, as the company increased its stock price by 50% in 4 months as a result of the research and development activities for developing the Covid-19 vaccines.

However, the company again lost 20% of its stock price in 5 months towards the end of 2020, incurring a 1% loss of its stock on the year run, which concludes the price fluctuations that were happening in 2020 and continue to happen until today.