Researchers expect the average British worker to earn around £470 (about €550) less per year by the end of this decade. Britain’s exit from the European Union is making its economy more closed, with damaging long-term consequences for productivity and wages, according to a research report published on Wednesday.
The report was written by researchers from the Decision Research Foundation and Swati Dhingra, an associate professor at the London School of Economics. Dhingra is scheduled to join the Bank of England’s Monetary Policy Committee in August.
It was expected that the United Kingdom would suffer after its exit from the European Union from the new trade rules that came into effect in January 2021. But the frightening decline in British trade with the European Union did not materialize.
Instead, Brexit has weakened British competitiveness and reduced openness to trade with other countries, concluded Sophie Hill, an economist at the Decision Foundation. “This will ultimately reduce productivity and real wages for workers,” Hill said.
The UK struggles with restrictive regulations
According to the report, instead of facing tariffs on the goods it exports to the EU, the UK faces greater regulatory hurdles.
The net effect of the new regulations would reduce productivity by 1.3% by 2030 compared to a scenario in which the UK remained in the EU. This means a real decline in annual income of 1.8 percent, or 470 pounds (550 euros) per employee.
However, the impact of Brexit could vary significantly by sector. For example, the fishing sector, much of which strongly supported Brexit, will likely contract by 30% due to difficulties exporting to the EU. The financial and legal sectors are likely to see their share of the UK economy decline by just 0.3 per cent, the report said.
“Travel enthusiast. Alcohol lover. Friendly entrepreneur. Coffeeaholic. Award-winning writer.”