On 31st January 2020, the United Kingdom formally left the European Union, ending nearly five decades of economic and political integration.
Five years on, the consequences of this departure are still unfolding. Brexit was championed as a move that would restore sovereignty, reduce bureaucracy, and create new global trade opportunities. However, the realities of Brexit have proven to be more complex.
From economic slowdown and trade barriers to labour shortages and shifting political alliances, Brexit has fundamentally reshaped the UK. Meanwhile, the European Union has also adjusted to life without Britain, reinforcing its internal unity while shifting some of its economic and financial focus away from London.
Economic Consequences: A Weaker Growth Outlook
The UK economy has grown at a slower pace than many of its European counterparts since Brexit. The Office for Budget Responsibility (OBR) estimated that the UK’s GDP will be 4% lower in the long run than if it had remained in the EU. Trade, investment, and productivity have all been negatively affected.
One of the most immediate effects has been on trade. The UK’s decision to leave the EU’s Single Market and Customs Union has led to new bureaucratic hurdles, supply chain disruptions, and a loss of preferential trade terms. Despite the 2020 Trade and Cooperation Agreement (TCA) preventing tariffs on most goods, new customs checks and regulatory divergence have created barriers. According to the UK’s Office for National Statistics (ONS), total trade with the EU remains below pre-Brexit levels, with small and medium-sized businesses particularly affected.
Lars Andersen, founder of My Nametags, which sells custom clothing labels, had to establish an operation in Ireland just to continue selling to EU customers. “It is a lot more complicated than before Brexit, but it’s worth it to continue trading,” he said. Many other businesses have faced similar dilemmas, with some choosing to move operations to the EU rather than struggle with increased costs and paperwork.
Julianne Ponan, CEO of allergen-free food company Creative Nature, described how Brexit wiped out her business in the EU market, forcing her to pivot towards the Middle East and Australia. It was only after adapting to post-Brexit trading conditions that she was able to regain some footing in Europe, but she estimates that the company lost four years of growth as a result. “We would be a lot further ahead in our journey if Brexit hadn’t happened,” she said.
A Trade Decline, Not a Trade Boom
Brexit advocates claimed that leaving the EU would allow the UK to strike new trade deals around the world, reducing reliance on European markets. However, the results have been underwhelming.
While the UK has signed trade agreements with countries such as Australia, New Zealand, and Japan, these deals largely replicate existing EU agreements rather than opening substantial new opportunities. The much-touted free trade deal with the United States has failed to materialise, and the benefits of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) remain uncertain.
In contrast, Brexit has introduced new complications for sectors that previously relied on seamless trade with the EU. The financial services industry, a key pillar of the UK economy, has lost its automatic right to operate across the EU, prompting some firms to relocate to Paris, Frankfurt, and Dublin. Meanwhile, manufacturers have faced increased costs and delays due to customs checks and divergence in product standards.
Labour Market and Immigration: A Self-Inflicted Crisis
One of the primary arguments for Brexit was to regain control over immigration. The UK introduced a points-based immigration system in January 2021, which ended the free movement of workers from the EU. While this reduced EU migration, it did not lead to the hoped-for increase in British workers filling these gaps. Instead, it has contributed to chronic labour shortages across key sectors.
Industries such as hospitality, agriculture, transport, and health and social care have struggled to recruit workers, leading to wage inflation and service disruptions. The UK’s seasonal agricultural sector, for example, has reported severe worker shortages, resulting in food supply chain issues and unharvested crops.
The NHS, already under pressure, has also suffered. The number of EU-trained doctors and nurses coming to work in the UK has fallen sharply, exacerbating staffing shortages. While the government has attempted to compensate by increasing recruitment from non-EU countries, this has placed additional strain on visa processing systems and international recruitment efforts.
Political Shifts and Public Opinion
Brexit has also transformed the UK’s political landscape. While the Conservative Party, under Boris Johnson, delivered Brexit, its long-term consequences have led to deepening divisions within the party. The promise of “Brexit benefits” has largely failed to materialise, contributing to political instability and leadership changes.
The Labour government, led by Keir Starmer since July 2024, has sought to reset relations with the EU, but without reopening the Brexit debate. While Starmer has ruled out rejoining the Single Market or Customs Union, his government is negotiating improvements to the UK-EU relationship, including smoother trade arrangements and closer cooperation on security.
Public sentiment on Brexit has shifted significantly. Opinion polls indicate that a majority of Britons now believe Brexit was a mistake, with particular disillusionment among younger voters and business leaders. However, the political will to rejoin the EU remains weak, as the costs and complexities of reversing Brexit would be considerable.
Impact on the European Union
For the EU, Brexit was initially seen as a major challenge, but five years on, the bloc has largely moved on. While the UK’s departure led to the loss of one of the EU’s largest economies and a key advocate for free market policies, it also reinforced unity among the remaining member states.
Financial and business sectors have adapted by shifting activity from London to other EU cities. The EU has strengthened its internal market and supply chain resilience, particularly in industries such as pharmaceuticals, technology, and finance. Meanwhile, Brexit has underscored the importance of EU membership for other countries, with nations such as Ukraine and Moldova now seeking to join the bloc.
Looking Ahead: The Future of UK-EU Relations
The upcoming review of the Trade and Cooperation Agreement in 2026 will be a crucial moment for the UK and the EU. Both sides may seek to reduce trade friction and improve cooperation in areas such as defence, climate policy, and research. However, major structural changes—such as rejoining the Single Market—remain politically unlikely in the near term.
Brexit has left the UK with more regulatory freedom but at significant economic cost. The expected benefits, including greater trade opportunities and a stronger domestic economy, have yet to materialise. Instead, businesses have faced disruption, economic growth has lagged behind European peers, and political divisions have deepened.
Five years on, the reality of Brexit is clearer than ever: it was not a singular event but an ongoing process with long-term consequences that will continue to shape the UK’s economy and politics for years to come. Whether these consequences lead to renewed cooperation with the EU or further divergence remains one of the key questions for the future.
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