[2][3][4][5][6] It is likely to produce a large decline in immigration from countries in the European Economic Area (EEA) to the UK,[7] and poses challenges for British higher education and academic research.
[8] According to one study, the referendum result had pushed up UK inflation by 1.7 percentage points in 2017, leading to an annual cost of £404 for the average British household.
[28] There was overwhelming or near-unanimous agreement among economists that leaving the European Union would adversely affect the British economy in the medium- and long-term.
[26] In October 2021, the UK government's Office of Budget Responsibility calculated that Brexit would cost 4% of GDP per annum over the long term.
[53] CIPS has reported think tank Campaign for European Reform's research, which found that UK goods trade was 11.2%, or £8.5 billion, lower in September 2021 than it would have been according to the Office for Budget Responsibility's forecast in March 2016.
[61] On the basis of Treasury figures, in 2014 the United Kingdom's gross national contribution (ignoring the rebate) was £18.8 billion, about 1% of GDP, or £350 million a week.
[62] The Institute for Fiscal Studies have said that the majority of forecasts of the impact of Brexit on the UK economy indicated that the government would have less money to spend even if it no longer had to pay into the EU.
[63] According to economist Paul Krugman, Brexit supporters' assertions that leaving the single market and customs union might increase UK exports to the rest of the world are wrong.
[64] European experts from the World Pensions Council (WPC) and the University of Bath have argued that, beyond short-lived market volatility, the long-term economic prospects of Britain remain high, notably in terms of country attractiveness and foreign direct investment (FDI): "Country risk experts we spoke to are confident the UK's economy will remain robust in the event of an exit from the EU.
'The economic attractiveness of Britain will not go down and a trade war with London is in no one's interest,' says M Nicolas Firzli, director-general of the World Pensions Council (WPC) and advisory board member for the World Bank Global Infrastructure Facility [...] Bruce Morley, lecturer in economics at the University of Bath, goes further to suggest that the long-term benefits to the UK of leaving the Union, such as less regulation and more control over Britain's trade policy, could outweigh the short-term uncertainty observed in the [country risk] scores.
This came after media reports that a survey by the Institute of Directors suggested that two-thirds of businesses believed that the outcome of the referendum would produce negative results as well as falls in the value of sterling and the FTSE 100.
[94] "No-one should doubt our resolve to maintain the fiscal stability we have delivered for this country .... And to companies, large and small, I would say this: the British economy is fundamentally strong, highly competitive and we are open for business.
"[95] On 14 July 2016 Philip Hammond, Osborne's successor as Chancellor, told BBC News the referendum result had caused uncertainty for businesses, and that it was important to send "signals of reassurance" to encourage investment and spending.
The group's chief economic adviser, Peter Soencer, also argued there would be more long-term implications, and that the UK "may have to adjust to a permanent reduction in the size of the economy, compared to the trend that seemed possible prior to the vote".
[101] On 20 July 2016, a report released by the Bank of England said that although uncertainty had risen "markedly" since the referendum, it was yet to see evidence of a sharp economic decline as a consequence.
[102] In September 2016, following three months of positive economic data after the referendum, commentators suggested that many of the negative statements and predictions promoted from within the "remain" camp had failed to materialise,[103] but by December, analysis began to show that Brexit was having an effect on inflation.
[104] Research by the Centre for European Reform[clarification needed] suggests the UK economy is 2.5% smaller than it would have been if Remain had won the referendum.
[105] On 23 September 2022, the day of the Truss-Kwarteng mini-budget, Mark Carney summarised the impact of Brexit as follows: "in 2016 the British economy was 90 per cent the size of Germany's.
Her Majesty's Treasury and the Bank of England have engaged in extensive contingency planning and the chancellor and I have remained in close contact including through the night and this morning.
[114] By the end of Friday's trading, both HSBC and Standard Chartered had fully recovered, while Lloyds, RBS Group and Barclays remained more than 10% down.
[127] Economists have warned that London's future as an international financial centre depends on whether the UK will obtain passporting rights for British banks from the European Union.
This imbalance could potentially give Britain some negotiating leverage e.g. power of retorsion in case the EU attempts to impose an abrupt cancellation of the mutually-binding obligations and advantages pertaining to the Markets in Financial Instruments Directive 2004 ("fund passporting").
"[130] In July 2016, the IMF released a report warning that "'Brexit' marks the materialisation of an important downside risk to global growth", and that considering the current uncertainty as to how the UK would leave the EU, there was "still very much unfolding, more negative outcomes are a distinct possibility".
Let me be clear: compared with today's smooth single market, all the likely Brexit scenarios will have costs for the UK economy, and to a lesser extent for the EU as well.
Lagarde also said a "disorderly" or "crash" Brexit would have many results, including cuts to growth, a worsened deficit and depreciation of sterling, causing the size of the UK economy to be reduced.
[131] In interviews while attending the G20 Summit, Philip Hammond, the UK's recently appointed Chancellor of the Exchequer, said the country would attempt to minimise uncertainty by explaining in the near future "more clearly the kind of arrangement we envisage going forward with the European Union".
Hammond also reiterated previous Government comments indicating that steps would be taken to stimulate the economy including tax cuts or increased spending, though without specifics.
"[134] Although he was not addressing only the UK's departure from the EU, Mark Carney, chair of the Financial Stability Board (and Governor of the Bank of England), sent a letter in late July 2016 to Finance Ministers attending the G20 Summit and to Central Bank Governors about the difficulties the global economy had weathered (including the effects of Brexit) and the steps the FSB was taking.
[135] The letter indicated that the financial system had "continued to function effectively" in spite of the "spikes in uncertainty and risk aversion", confirming that "this resilience in the face of stress demonstrates the enduring benefits of G20 post-crisis reforms."
He emphasised the value of specific reforms that had been implemented by the Financial Stability Board stating that these had "dampened aftershocks from these events [world crises] rather than amplifying them".