UK Economy Statistics and Facts

Will the UK’s economy collapse or prosper as a result of Brexit?

Advocates of both “Leave” and “Remain” agree that the economies of both the UK and the EU are bound to take a hit from Brexit. However, each side has different expectations of how long and how severe this effect will be.

Brexit will inevitably impact the size of the UK’s economy by affecting the country’s growth, trade, and jobs. UK economy statistics suggest that 2020 will bring the country’s poorest economic performance in over a decade with a growth rate of only 1.0%.

The uncertainty surrounding the final outcome of Brexit has been threatening to take the financial world’s spotlight off the UK. Analysts predict that London will struggle to maintain its status as a global financial capital; its loss could be New York’s gain.

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UK Economy Statistics and Facts for 2024 - Editor’s Choice

• The United Kingdom's decision to divorce the European Union has already cost £130 billion, with the bill expected to grow by another £70 billion by the end of 2020.
• The combined cost of Brexit since the 2016 vote is expected to surpass the total cost of the UK’s contributions to the EU's budget.
• After adjusting for inflation, the UK will have injected £215 billion into the EU from 1973 to the end of 2020.
• Brexit will limit the flow of international workers whom the UK has been relying on economically for decades.
• The UK’s GDP growth rate is expected to average only 1.0% in 2020.

Brexit and the UK economy

In the referendum that took place on June 23, 2016, the United Kingdom's population chose not to be a member of the European Union anymore. Citizens decided that all the benefits of belonging to the union and its single market were overshadowed by the costs of free migration.

Putting a single and conclusive figure on the economic impact that Brexit will have not only on the UK but also the rest of the world is not an easy task. We’ve compiled the following United Kingdom economy facts and predictions to try to answer this challenging question:

Brexit facts show that the cost of the United Kingdom's decision to withdraw from the European Union has already reached £130 billion, with another £70 billion expected to be added by the end of 2020.

Source: Bloomberg Economics

Business uncertainty has made the UK economy 3% smaller than it may have been if the country hadn't opted out of the EU.

Source: Business Insider

According to Brexit economic statistics, after adjusting for inflation the UK will have injected £215 billion into the EU from 1973 to the end of 2020.

Source: House of Commons Library

The combined cost of Brexit since the 2016 vote is expected to surpass the total cost of the UK’s contributions to the EU's budget, which were a focal point of the “Leave” campaign's argument.

Source: Business Insider

The Brexit negotiating period has already been extended three times by the British government.

Source: Investopedia

Brexit statistics show that annual economic growth has dropped from 2% to 1% due to businesses holding back on investment as a result of the 2016 referendum.

Source: Bloomberg Economics

The British pound tumbled from $1.48 on the day of the Brexit referendum to $1.36 the following day. It averaged $1.30 in December 2019 and January 2020.

Source: Federal Reserve System

The UK economy post Brexit: trade deals

As Brexit approaches, the United Kingdom has been putting lots of effort into trying to recreate all its trade deals with the European Union. This is to ensure that the UK doesn't lose its tariff-free privileges with the EU's trading partners after the transition period ends. If the UK doesn't manage to complete its new trading agreements, the country will face additional taxes on goods under the rules of the World Trade Organization (WTO).

Up until now, the country has only been able to make arrangements and sign new agreements with countries that have current EU trade deals. After January 31, the Brexit date, the UK will be allowed to negotiate and sign new trade agreements with the US and other countries without existing EU deals.

With the transition period expiring on December 31, 2020, the UK will also have to arrange a new trade deal with the EU to ensure its goods remain free of tariffs and other trade barriers.

As a member of the EU, the UK was able to trade with more than 70 countries without needing to pay tariffs on most goods.

Source: BBC

Of the 759 treaties the UK will have to renegotiate after Brexit, 295 are related to trade and 49 to customs.

Source: EU Treaties Office Database

In 2016, the year of the Brexit vote, 48% of all the goods and 39% of all the services the UK exported went to the EU, making it by far the country’s biggest trading partner.

Source: Office for National Statistics

The UK’s automotive sector is particularly reliant on the future UK-EU commerce agreement. In 2016, EU countries accounted for 88% of the UK’s auto imports and 42% of its exports.

Source: Office for National Statistics

If the UK and the EU failed to reach a trade agreement, cars would be subject to a 10% tariff under WTO terms.

Source: Office for National Statistics

According to the United Kingdom’s economic statistics, the country’s financial companies directed £24 billion worth of services to the EU in 2015. This amounted to 45% of the UK’s total financial services exports in the year before the referendum.

Source: Office for National Statistics

The status of London as a financial center could be shaken by the effects of Brexit. A number of major banks are contemplating moving jobs offshore amid uncertainty regarding future trade arrangements.

Source: Office for National Statistics

The Northern Ireland Protocol, the controversial Irish backstop, has been one of the major stumbling blocks of Brexit trade negotiations.

Source: BBC

Theresa May's backstop solution was accepted by EU-UK negotiators but faced a backlash among many British MPs, who feared it would trap the country in the EU customs union and prevent it from arranging its own trade deals.

Source: BBC

The backstop deal was voted down by MPs three times, which ultimately led to Theresa May’s resignation.

Source: BBC

Describing the Irish backstop as anti-democratic, current UK Prime Minister Boris Johnson proposed the concept of a "single regulatory zone" as a solution for the island of Ireland.

Source: BBC

UK economy statistics in the run-up to Brexit

The British economy showed signs of volatility throughout 2019, reflecting the multiple change of Brexit dates in March and October. The October 31 deadline, which was eventually extended by Boris Johnson and the European Union, overshadowed the third quarter of 2019. In anticipation of the Brexit deadline, many companies decided to change the timing of their activities.

According to official figures, gross domestic product - the broadest measure of a country’s economic prosperity - was more prone to revisions during this period than usual.

To calculate the United Kingdom’s gross domestic product for each quarter, the Office for National Statistics gathers UK economic data from thousands of companies that operate in the country. The organization uses three different approaches to measure the country’s quarterly GDP data. The methodology includes the output approach (the total value of finished goods and services produced), the income approach (the total income of all nationals), and the expenditure approach (the total value of what everyone in the country has spent).

Here are the most important UK economy statistics and facts from this period:

The GDP of the UK increased by a revised 0.4% in Q3 2019.

Source: Office for National Statistics

Contrary to the initial estimates of GDP numbers, the UK's economy grew at a faster rate from July to the end of September, picking up after negative growth of 0.2% from April to June 2019.

Source: Office for National Statistics

In comparison with the same quarter (July to September) in the previous year, the economy of the UK recorded a growth of 1.1% in Q3 last year.

Source: Office for National Statistics

Based on the United Kingdom’s economy statistics during Q3 2019, services, production, and construction output were all subject to upward revisions, which means they performed better than was expected.

Source: Office for National Statistics

UK economy statistics show that services output grew by a revised 0.5% in Q3 2019 after Q2 had ended with the weakest quarterly results in three years.

Source: Office for National Statistics

Both manufacturing and production output increased by 0.1% in Q3 2019.

Source: Office for National Statistics

UK economy data shows that, following a slow period from April to June, construction output grew by 1.2% in Q3 2019.

Source: Office for National Statistics

The UK economy after Brexit: GDP forecasts for 2020

Brexit uncertainty is expected to continue weighing on the economy of the UK throughout 2020. With the end of the transition period less than a year away, analysts are concerned about the possibility of another cliff edge in December. Brexit analysis has found that the macroeconomic consequences of the withdrawal from the EU will include a decrease in British GDP compared with the predicted growth that would have occurred if the country had remained part of the European Union and its single market.

Here’s a short overview of UK GDP forecast data for 2020:

The UK’s GDP growth rate is expected to average 1.0% in 2020.

Source: HM Treasury

Inflation projections predict that the consumer price index (CPI) will increase by an average of 2.2% in Q4 of 2020.

Source: HM Treasury

Based on UK economic data, the retail price index (RPI) is expected to go up by an average of 2.8% in Q4 2020.

Source: HM Treasury

UK employment statistics in the run-up to Brexit

In the UK, the employment rate is calculated as a proportion of people aged between 16 and 64 years who are in paid work. On the other hand, the unemployment rate doesn’t represent the entire unemployed British population. Unemployment measures people who are not in paid work but have been actively looking for a job within the last four weeks and could start working in a new position within the next two weeks.

Estimated employment rates for both men and women aged 16 and older have been consistently increasing since the beginning of 2012. Here are some of the most recent statistics on employment in the lead-up to Brexit:

UK economy stats show that the country’s employment rate hit a record high of 76.3% from September to November 2019.

Source: Office for National Statistics

The country's unemployment rate between September and November 2019 was estimated at 3.8%, 0.2% lower than a year earlier.

Source: Office for National Statistics

According to UK economic growth stats, the projected annual increase in average weekly earnings for British employees remained virtually unchanged from September to November 2019: 3.2% for total pay including bonuses.

Source: Office for National Statistics

There were approximately 805,000 job openings in the UK in the quarter from October to December 2019, which was 49,000 fewer than a year earlier in the same quarter.

Source: Office for National Statistics

More than 3 million EU citizens are employed in the UK, with their careers ranging from the hospitality industry to public services.

Source: Office for National Statistics

As a part of the deal, 1.3 million British nationals who live and work in the European Union will continue to do so in their host country without working visas, as will EU citizens in the UK.

Source: House of Commons Library

Brexit impact statistics: labor market

Based on UK economic data, uncertainty over Brexit outcome and weak productivity have resulted in somewhat slow wage growth and persistent recruitment difficulties over the past two years. According to the CIPD's Labour Market Outlook 2018 report, more than 40% of the United Kingdom’s employers who took part in the survey said they’ve been having a hard time finding the right workers for their open positions. Here are a few more UK economic statistics related to the labor market:

Brexit will limit the flow of international workers that the United Kingdom's economic system has been relying on for decades.

Source: CIPD

Recruiters who have found it difficult to fill their organization's job vacancies cite unsuitable candidates (37%) and very few applications (31%) as the prevailing issues.

Source: CIPD

About 53% of the employers who had a hard time filling vacant positions in 2018 decided to increase starting salaries.

Source: CIPD

27% of employers from a range of different sectors say it has become more difficult to retain current employees.

Source: CIPD

The impact of Brexit on the EU economy

The UK’s decision to divorce the EU after 47 years will not only result in social and economic changes, but also in political shifts and institutional reformations for the union. Analysts say that the Brexit consequences list will be a long one both for the United Kingdom and the economy of the remaining EU countries. Brexit data indicates that the main repercussions of the UK’s withdrawal from the EU will relate to trade.

Here are a few stats and facts that explain the economic impact of Brexit on the UK and the EU:

Statistics after Brexit show that the UK's vote has encouraged French and German anti-immigration parties; if either of those two counties left, the EU would lose its economic pillars and almost certainly dissolve.

Source: CIPD

UK economy key stats demonstrate that the EU will be considered a less attractive trade partner for the US and Japan without the UK.

Source: Global Counsel

With one of its biggest budget contributors leaving, the EU will have to fill the gap with higher contributions or by limiting spending.

Source: Global Counsel

Strong trading, financial, and investment bonds show that the country most exposed to Brexit will be the Netherlands, followed by Ireland and Cyprus.

Source: Global Counsel

The impact of Brexit on the global economy

Brexit may prove to be a wise choice for the UK’s economy system in the long run, but there’s no arguing that it is a vote against globalization. The outcome won't only impact the UK and the EU - it will inevitably shake the economy of the whole world, having both positive and negative consequences on the economies of other global powers, including the US.

According to Brexit stats, the euro fell by 2% and the pound fell by 8% the day after the vote. The value of the dollar consequently increased, ultimately making US shares more expensive for foreign investors.

Source: Federal Reserve

As the UK and EU markets split, US banks will need to rethink their commitments to the individual segments of the banking market.

Source: Deloitte Center for Financial Services

Enduring uncertainty will push US banks to downsize investment commitments not only in the UK but also in the EU.

Source: Deloitte Center for Financial Services

Analysts predict New York may benefit from London's inevitable struggles to keep its international clients from the finance sector.

Source: Deloitte Center for Financial Services

As the US doesn’t currently have a specific trade deal with the EU, the country will be able to negotiate and sign a special arrangement with the UK as soon as the Brexit date passes.

Source: CNBC

Glossary

• Gross domestic product (GDP) is calculated by adding up the total monetary value of all finished goods and services produced within the borders of a certain country during a specific period of time. GDP can be measured in three ways: production, expenditures, or incomes. It is used to estimate the size and health of a country's economy. Even though the concept of GDP has its limitations, it's still one of the most important tools for guiding strategic decision making. There are a few different types of GDP measurements: nominal GDP, real GDP, GDP per capita, and GDP growth rate.

• Nominal GDP is also referred to as "current-price GDP," "GDP at current prices," or "money GDP." It represents gross domestic product evaluated at current market prices. Nominal GDP isn't adjusted for inflation, which means it includes all of the changes in market prices that have taken place throughout the current year due to deflation or inflation.
  
  
• Real GDP is sometimes also described as "GDP corrected for inflation." "GDP at constant prices," or "deflated GDP." Real GDP is a macroeconomic measure that represents gross domestic product corrected for inflation or valued at the market prices of a base year. The base year is subject to change from time to time.
  
  
• GDP per capita is calculated by dividing a given country's gross domestic product by its total population. This ratio shows how high a certain country's living standards are. Alongside GDP, GDP per capita is used by economists globally to measure a country's prosperity and economic growth.
  
  
• The GDP growth rate is an indicator that shows the dynamics of a certain country's economic growth. It does so by comparing a country's increase in GDP from one quarter to a previous quarter.
  
  
• Inflation is defined as a constant rise in the general level of prices and represents a drop in the purchasing power of a certain currency. Naturally, consumers don't approve of rising market prices. However, a constant and moderate price growth indicates a healthy economy.
  
  
• Deflation, as opposed to inflation, represents a constant fall in the general level of prices in an economy.
  
  
• The GDP deflator, or the implicit price deflator for GDP, is a measure that shows the average price of all domestically produced goods and services in a given economy. This price index is calculated using nominal GDP and real GDP data and it measures price inflation or deflation.
  
  
• Consumer price index (CPI) is another indicator that’s important for the GDP of the UK. It measures changes in overall price levels. There are two main differences between the CPI and the GDP deflator. First, the CPI measures only the change in prices that a typical household has to pay for an average "basket" of goods and services. Second, when calculating the price level index value, the CPI uses the base year numbers, not the current year quantities. By approximating consumption patterns, the CPI essentially tries to estimate the purchasing power of a nation's currency.
  
  
• Retail price index (RPI) represents an older measure of inflation that is calculated and issued by the United Kingdom's Office of National Statistics. Although this measurement isn't considered one of the official inflation rates by the UK government, it's still used to calculate the cost of living and wage escalation.