Brexit will damage the United Kingdom’s competitiveness, hurt productivity, and drop workers’ wagers for the rest of the decade, according to a damning new study.
The Resolution Foundation published a new think tank report in collaboration with the London School of Economics on how Britain’s cost of living crisis is being made worse by Brexit dragging down the country’s growth potential.
The study shows the average worker in Britain is on course to suffer more than £470 every year in lost pay by 2030 after rising living costs are taken into account. This is compared with what would have happened if the UK stayed in the European Union.
Now, six years after the referendum, research shows Brexit is damaging the competitiveness of British exports on the world stage, just as companies are being forced to manage fallouts from the Covid pandemic and Russia’s war in Ukraine, pushing inflation to all-time highs.
“A less open Great Britain is expected to be poorer and less productive,” the report said grimly.
New official figures released today showed a fresh rise in inflation rates from a whopping 9 percent in April to 9.1 percent in May. This comes as gas prices surge, and weekly shopping costs also rise enormously.
British Prime Minister Boris Johnson has warned workers to not ask for pay rises, claiming it will drive inflation higher. Last year, Johnson claimed — apparently falsely — that Brexit could create a high-wage, high-productivity economy of the future.
But the report today shows that Brexit will weigh heavily on productivity gains over the coming years through the rest of this decade.
The research estimates that labor productivity, which is a key measure of economic output per hour of work, will be reduced by 1.3 percent by 2030 due to a decline in openness of the UK economy post-Brexit. This is equivalent to losing a quarter of efficiency gains achieved over the past decade.
Ministers say that bigger pay rises for British workers are only sustainable if there are productivity gains. But with the expected decline in the efficiency of the economy post Brexit, the research says inflation-adjusted pay is now set for nearly a 2 percent fall by 2030.
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