introduction to brexit essay

Brexit explained: how it happened and what comes next

Confused by the whole 1,300-day Brexit saga? This summary sets out how and why it happened, and what can be expected in 2020 and beyond

How did we get here?

Where to start? There’s geography: Britain is an island, and has been since geologically Brexiting from the continent 8,000 years ago. And history: unlike most of western Europe , it has not spent the past few centuries as a battlefield. Its history, rather, is global and imperial.

That, plus second world war heroics, has given it a profound sense of exceptionalism, reinforced by relative economic success and an overwhelmingly Eurosceptic popular press that adores dripping corrosive untruths about Brussels.

All this eventually combined to create the impression that the EU was essentially an anti-British plot: something that was somehow done to us. Hardline Tory Euroscepticism emerged with Margaret Thatcher’s Bruges speech of 1988, hounded the party into opposition in the 1990s, and returned with a vengeance once Conservative rule was restored in 2010.

Amid the bitter fallout of the financial crash, mounting public concern over immigration and a political threat from the right in the form of Nigel Farage’s anti-EU Ukip party led David Cameron to promise an in-out Brexit referendum if he won the 2015 election.

A largely populist, emotive and evidence-free campaign with the inspired slogan “Take back control” carried the day, with voters motivated by a wide range of factors opting by 52% to 48% in favour of the UK leaving the EU.

Three years of exhausting stalemate set in, as parliament refused to muster a majority in favour of a withdrawal deal mired in uncertainty chiefly over the future status of Northern Ireland.

So what broke the deadlock?

In short, a meeting in a wedding venue in the Wirral on a cold day in October 2019.

Boris Johnson and Irish premier Leo Varadkar broke the impasse with an agreement on what to do about the tricky land border between Ireland and Northern Ireland.

This frontier had become a 300-mile stumbling block for Theresa May, who was unable to broker an agreement on how to take Northern Ireland out of the EU without reinstating unworkable – and unpalatable – border checks.

Johnson and Varadkar essentially agreed to shift the border checks to between Northern Ireland and the rest of the UK.

The deal is not popular in Northern Ireland. But it is one that commands the support of the Conservative party and its 80-strong majority. So, after it was approved by MPs in December and is ratified in the European parliament and Westminster later this week, it will bring the final curtain down on 47 years of EU membership at 11pm on 31 January.

So is the UK out of the EU?

“Yes, but”. At the stroke of 11pm on 31 January (midnight in Brussels), the UK ceases to be a member of the EU. The divorce is sealed. The only way back is an application to rejoin.

But many people may not notice the difference, as the UK enters an 11-month transition period to allow time to negotiate a new relationship. That means staying in the EU single market, its customs union and paying into its budget. British citizens can continue to live, work, study and retire to the EU , while EU27 nationals enjoy those reciprocal rights in the UK.

A more significant moment could be 1 January 2021, the UK’s first day outside EU rules. Under the Brexit withdrawal agreement, that day could be delayed until 2022 or 2023, but Johnson has ruled out any extension of the transition period .

So what actually changes on Friday?

Life will carry on as normal for individuals with one key change – UK citizens, from 11pm, will no longer be EU citizens.

British passport holders will continue to be able to travel and work in the EU because the country remains in the single market for the transition period up to 31 December and the freedom of movement of goods, people, services and capital over borders applies until then.

The main change is legal and institutional. The article 50 process is over and non-reversible. Friday is the point of no return to the EU.

The UK will continue to follow EU rules, but have no say in making them. British ministers will play no part in the EU law-making process . The prime minister will cease attending EU summits to set the bloc’s priorities.

The UK’s 73 MEPs will be sent home, with one of the parliament’s union jacks dispatched to the EU-funded House of History . The last UK commissioner, Julian King , has already said goodbye to Brussels. The EU will move on without Britain.

Over 47 years, British governments cheered liberal economic policies (above all the single market), promoted EU enlargement, invented regional policy subsidies for poorer regions, pushed reform of fisheries and farming, watered down some environmental protection laws (and championed others), while avoiding the euro and the Schengen passport-free zone.

The UK had “the best possible world” , concluded one veteran French diplomat. Now it’s gone.

And how is the country planning to mark it?

After almost half a century of membership, the departure from the EU is a historic event. But the prime minister has to be careful about not deepening the divisions in the country by being too celebratory and has instead chosen a series of toned-down events to mark the occasion.

Instead of Big Ben chiming out as the UK officially leaves at 11pm on Friday, a clock counting down be projected on to No 10 Downing Street.

And an effort to convey the Tory party’s commitment to “levelling up” the country, a special cabinet meeting will be head in an as-yet-undisclosed location in the north of England.

The union jack will fly from all flagpoles in Parliament Square but there will be no emblematic lowering of the EU flag.

A commemorative Brexit 50p coin with the words “peace, prosperity and friendship with all nations” will come into circulation. New stamps marking the occasion are also in the pipeline.

Farage and the Leave Means Leave campaign are hosting a party for the countdown in Parliament Square, with Brexiters encouraged to go in fancy dress.

There is no official wake for remainers but Guardian readers have shared their private plans to mark the momentous day.

What will happen next?

There is a set timetable for the year with negotiations expected to formally kick off after 25 February.

By 1 July there must be a deal on fisheries and a UK decision on whether to ask for an extension to the transition period.

Johnson has urged Brussels to fast-track trade talks, but the EU moves at its own pace. Draft negotiating mandates are due to be produced by 1 February and EU ministers are expected to approve a mandate for the chief negotiator, Michel Barnier, on 25 February, allowing formal talks to begin soon after.

These talks will be unprecedented , and could cover a vast sweep of policies, including trade, security, foreign affairs, data, fisheries, cultural-educational ties and much more.

However, with just 11 months to negotiate, the chances are there will only be a “bare bones” deal likely covering trade, fisheries and security. If that is the case, then, at the end of 2020, there will be a lot of unfinished business. Differing aspirations for the trade talks have raised the prospect of a new no-deal scenario at the end of this year.

Leaving the transition period without a trade deal would not lead to the major diplomatic bust-up that failure on the Brexit withdrawal agreement would have done.

It would have huge domestic consequences, however, with representatives of the car industry, hospitals, agriculture and directors already expressing alarm over Sajid Javid’s declaration that the UK will not follow EU rules , which will cause hold-ups in Dover and Calais and possibly lead to businesses quitting the country.

In the absence of a deal, the earlier accord on citizens’ rights, money and the Irish border remains intact.

The special arrangements that apply in Northern Ireland will kick in, deal or no deal.

Both sides would brace themselves for the economic shock of trading on World Trade Organization terms, an outcome that is more damaging for the UK . But talks would roll on.

What are the big issues at stake here?

Top of the list is a trade deal to ensure the tariff and quota-free flow of goods between the EU and UK. But the EU will only agree to zero tariffs and zero quotas i f the UK pledges zero dumping – that is, not lowering social and environmental standards to outcompete the EU.

Negotiators will almost certainly clash over the EU’s refusal to bring services into the trade deal, leaving the City of London reliant on a patchwork of market access agreements that can be withdrawn at any moment.

Another early fight will be over fish, as the EU seeks to link goods trade to maintaining the status quo on access to British waters, a demand seen as outrageous in London.

The non-trade topics sound easier, but are full of political landmines. For instance, agreeing a replacement for the European arrest warrant will require Germany to change its constitution. The UK will struggle to achieve the historic first of securing outside access to some EU crime-fighting databases .

What will happen to the economy?

It depends who you ask. In the short term, much of the risk seems to have been priced in, at least on currency markets, where sterling still languishes compared to where it was in June 2016. The stock market is well ahead.

A slightly more certain outlook could allow business investment to recover, after years of lagging behind Britain’s G7 peers. But against that must be weighed the unpredictability of the looming trade talks.

What does Europe think about the big Brexit moment?

The EU has always expressed regret at Britain’s decision to leave, repeating as long as legally possible throughout the Brexit process that the door was still open should the UK change its mind and, more recently, that it could always reapply after leaving.

But the bloc has also robustly defended its interests, in particular the integrity of the single market, insisting, with unexpected unanimity, that Britain could not “have its cake and eat it” by retaining the benefits of EU membership while diverging from its rules.

Frustration mounted at what the EU27 saw as the UK’s reluctance to accept the real-world consequences of the vote to leave, its inability to agree on what kind of Brexit it wanted, and of course the long months of parliamentary psychodrama and paralysis that ensued.

Some countries (France) have taken a much tougher line than others; some (the Netherlands, Denmark) will suffer much more from a no-trade-deal Brexit. But the EU27 should maintain their unity during the future relationship talks: however much of a blow a hard Brexit may be, a weakened single market is a far more damaging prospect.

What does it all mean for Britons in Europe…

No one yet fully knows; much remains to be negotiated. The withdrawal agreement secures British citizens’ basic rights to live and work within their EU host countries, a broadly similar post-Brexit status in each country, and EU-wide coordination on reciprocal healthcare and social security.

During the 11-month transition period, because the UK will remain in the single market, Britons will retain the freedom to move within the EU as before. After it ends they will have the right – providing they register, or in some countries apply, within a given time limit – to stay and, after a time, seek permanent residence.

But when the UK leaves the single market after transition, certain rights will fall away, including freedom of movement. This is a major blow for the 80% of UK citizens on the continent who are of working age or younger; they fought hard to lock free movement into the withdrawal agreement, but the EU decided this should be part of the trade talks.

Some rights within the gift of the UK are not yet assured either, such as home fees for British students on the continent who wish to study in the UK, and family reunification rights for Britons returning to the UK with EU family members.

...and for Europeans in Britain?

Many British voters who were passionate about staying in the EU will be feeling upset and emotional at 11pm on 31 January. While life goes on as normal in general, it is the point of no return and from 1 February British citizens will no longer be EU citizens.

But for EU nationals in the UK the moment will cast a long shadow of material consequence. While the government has given assurances that they will not face deportation or loss of social or employment rights, the bond of trust with the government is weak, not least because of the Windrush scandal.

And for the rest of the world?

Although it will certainly affect the UK more than the EU in almost every respect, Brexit will undoubtedly weaken the EU economically and politically. Britain was the EU’s second-biggest economy, a major net budget contributor, key military force and one of the bloc’s two nuclear powers and permanent UN security council members.

The EU’s institutions may have withstood the test of Brexit better than expected so far, and support for the EU among its citizens has generally increased. Brexit has also proved a salutary lesson, with almost all the bloc’s nationalist and Eurosceptic parties dropping promises to follow the UK’s example.

But the UK’s departure has distracted attention from a number of other big and urgent problems, including the climate crisis, and settling on the new relationship is also likely to be a messy and debilitating process. Longer term, in the balance of global powers a smaller, fractured Europe is obviously a weaker Europe.

In the face of an aggressive China and an increasingly protectionist and unpredictable US, the EU will need to be significantly tougher, with a centralised foreign policy and stronger rules ensuring European companies can compete with overseas rivals. Brexit makes that imperative even more urgent.

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“Brexit” Essay Example

This Brexit essay deals with the results of Brexit and its impact on the world. Check it out if you’re looking for Brexit essays to take inspiration from.

Introduction

Reference list.

The possibility of the UK leaving the European Union or the so-called Brexit is a key source of concern for the major part of the British business world. It is assumed that the potential changes in the trade relations with the EU, as well as the uncertainty associated with investments, can have a negative impact on the UK economy. World economists and analysts try to carry out predictions regarding the possible consequences of this decision.

In order to analyze the character of the potential outcomes, it is critical to study the way Brexit will affect various economic aspects such as imports, exports, investment sector and others. The paper at hand is aimed at elucidating the advantages and disadvantages of the UK leaving the union from different perspectives.

While analyzing the role of EU for the British economy, it is critical to understand the fact that the former currently regulates almost all the aspects of the British trade.

EU membership and the trade arrangements now affect approximately 60% of the British trade. Experts state that this percentage is likely to grow up to more than 85% in case the EU succeeds in the trade negotiations it is now carrying out (Giles 2016).

It is also important to note that EU members belong to the customs union, which means they are not imposed by the trade tariffs or customs controls on the products moving inside the EU, as well as a common tariff that refers to goods entering the EU from the outside.

In addition, the concept of the EU’s single market is aimed at ensuring the free flow of services, capital and people within the member states. In the meantime, experts point out that in the terms of goods, the single market operates far more effectively than from the services standpoint, as there are still numerous legal, administrative and cultural barriers to the movement of services around the Union (Boulanger & Philippidis 2015).

Moreover, the EU performs a representative function in any trade negotiating process. In other words, it performs decision making on the behalf of all 28 members in the World Trade Organisation (WTO) and manages the free trade agreements (FTAs) under the EU’s Common Commercial Policy.

As a member of the EU, Great Britain is represented in the European Commission, which participates in the final shaping of union’s rules and regulations. As a result, the EU has a powerful regulatory influence on the entire UK economy, including the public and private sectors.

Some analysts assume that the EU’s role in the UK life is excessive – the former does not only regulates national policy making but restricts the democratic capacity of the British electorate (Booth et al. 2016).

First and foremost, it is critical to note that the EU currently regulates almost all the significant parts of the UK economy, including the public sector and other domestic firms which do not carry out any exporting operations (Amlôt 2016). As a result, Brexit is likely to have a serious impact on the UK economy in general. Experts point out, eight key sectors that Brexit is apt to influence:

• Goods: automobiles; medicals and pharmaceuticals; airplanes; capital goods and machinery; food, drinks, tobacco;
• Services: financial; insurance; professional (Booth et al. 2015).

The key concern resides in the fact that the European Union is now the biggest export market for Great Britain. According to official statistics, about 53% of British goods are annually purchased by EU members. In case the UK decides to leave the EU, it will still have a chance to export its goods to such countries as Norway, Iceland and Switzerland.

The main difference resides in the fact that the country will be deprived of the opportunity to participate in the rules setting that is regulated by the EU single market. Therefore, it will have to act in accordance with the rules that are imposed by the EU.

However, an opposite opinion suggests that Brexit can have some positive outcomes for the British economy. Thus, for example, some experts believe that leaving the Union is likely to encourage the local manufacturers to focus on the collaboration with such countries as China, Brazil and India (Giles 2016). In other words, Great Britain will receive a chance to open up new export markets.

The diagram below represents the prognosis for the market access after Brexit generated by the Global Counsel.

The principle point in the framework of import perspectives resides in the fact that Great Britain currently imports a wide variety of goods from other EU members. According to experts’ estimation, its import significantly dominates over its export.

Thus, the statistic shows that in 2011, the country exported £159bn of goods to the union, whereas the imported goods would make about £202bn. Therefore, an annual trade deficit for the country is now £42bn ( Brexit could benefit UK economy, says £8bn fund manager , 2016). Therefore, British analysts have grounds to assume that in the terms of import British membership in the EU is more beneficial for the latter.

However, it is necessary to admit that such large scope of the imported goods is mainly determined not by the regulations imposed by the EU but the social demand for foreign goods, for example, German automobiles and French luxury products. As a result, the main concern of the British is about the possibility of receiving higher tariffs on EU imports in case they decide to leave it.

The most critical concern is, therefore, to perform an adequate consideration of the possible risks for the Great Britain’s economy in case it chooses to leave the EU. According to the expert’s estimation, the so-called “Brexit” would be less harmful to the Great Britain than for the EU itself.

Thus, the majority of the financial analysts claim that the country is likely to have only insignificant difficulties arranging its free trade contract with the EU as soon as it leaves, as the UK has a considerable trade deficit with other Union members (Wood 2016). As a result, it would be reasonable to assume that the EU is likely to lose more exports profit from Great Britain than vice versa (Center for European Reform, 2014).

From the investment standpoint, the Brexit outcomes are unclear. At the current point, the UK is rather productive at attracting foreign investors. According to the authoritative sources, it is a home to an extended stock of the EU and the US FDI and it is in a more beneficial position than other members of the EU (Petersen, Schoof & Felbermayr 2015).

In fact, it is now of the most preferred investment locations in the modern markets. Statistics shows that the investment from all sources has increased largely throughout the past decades. However, it is critical to note that the rise has occurred due to the EU’s contribution to the largest extent.

The question, consequently, arises whether foreign investors will still be willing to contribute to the UK economy if it is not a part of the EU. Some economists warn that foreign investments are sure to be put off. According to the estimation of the National Institute of Economic and Social Research, for instance, overseas direct investment is likely to fall significantly.

Nevertheless, Capital Economics state that, due to the recent Eurozone crisis, the extent of the foreign investment might grow as the UK will, then, be regarded as a “safe haven” (Chu 2012, para.3).

In the meantime, it is critical to take into account the fact that the UK will be no more restricted by the burdens of the EU regulations. Hence, it will able to develop its trade more efficiently with faster-growing economies – the existing tariffs will be eliminated and the trade agreements signing will be performed without consulting the EU members (Wintour 2016).

Therefore, the principle idea that underpins these reflections is the assumption that the UK currently possesses an economy that is big enough to let the country act as an efficient trade negotiator on its own.

Immigration

The immigration question in the Brexit framework is, likewise, debatable. According to official statistics, approximately 165,000 of EU citizens moved to the UK in 2011. A year earlier, this number comprised 182,000 people (Chu 2012).

On the one hand, the opportunity to stop huge flows of immigrants might improve the general quality of life of the locals. In other words, the strain on public services and infrastructure will be significantly refused.

Specialists claim, for example that the immigration flows need to be cut considerably, and Brexit is the only way to regain control of the borders (Springford & Whyte 2014). Although their proponents do not necessarily insist on reducing immigration, they still firmly believe that the regulation rules should be set by British Government ( EU referendum 2016).

Meanwhile, some experts argue that intensive immigration brings considerable economic benefit for Britain as it assists in providing resources for the labour market and increasing the general productivity (Chu 2012). In other words, despite the fact that the flows of immigrants result in some problems with housing and service provision, the general net effect is positive.

According to experts’ estimations, the economic outcomes of the EU contributing to the UK are mixed. On the one side, in case Great Britain decides to leave the EU, it is likely to save 0.5% of its GDP ( Brexit ‘would trigger economic and financial shock’ for UK , 2016).

On the other side, analysts warn that the British government might find it problematic to reduce farm subsidies and development funds outside the EU ( A background guide to “Brexit” from the European Union , 2016).

The point is that such regions as Wales and Northern Ireland are currently sustainable beneficiaries of the EU budget – in case the EU cuts its investment, Westminster will have to replace it which will become a significant burden for its economy.

Therefore, the Brexit will be most harmful to particular regions because the EU currently performs the funding of the poorest regions – it contributes to their budget supporting the infrastructure, the education and the training.

From this perspective, leaving the union is definitely unbeneficial for the UK (Campos & Coricelli 2015). In case of the exit, Great Britain is apt to solve the problem of replacing the EU structural funds with national regional development programs.

The diagram below represents the share of the structural funds in internal investments.

Therefore, the outcomes of the British exit for the budget are rather unpredictable. Numerous researchers have made attempts to calculate the financial impact of this decision. Thus, for example, the economists from the Centre for Economic Performance of London School of Economics and Political Science have worked out two scenarios that are most likely to develop in case of Brexit. Their calculations are represented in the table before.

The offered table provides a critical analysis of two perspectives: optimistic and pessimistic. In the first scenario, a total welfare loss is expected to comprise 1.13%, which will be determined by potential changes in non-tariff barriers. The analysts point out the fact that non-tariff barriers play a critical role in regulating trade in such service industries like finance and accounting – these are the sectors where the country proves to be a major exporter.

In the second scenario, the total loss grows up to 3.09%. As it might be seen, the costs of reduced trade are more significant that the potential fiscal savings. According to the experts’ estimations, the loss will make £50 billion in the second scenario and about £18 billion in the first scenario in cash terms (Dhingra, Ottaviano & Sampson 2015).

The security problem is particularly acute as it is vital to assess potential risks of the leaving the EU adequately. One of the wide-spread opinions resides in the assumption that the EU membership endangers the country’s security.

Thus, some experts believe that remaining in EU means providing easy access to the terrorist attacks as the open border does not allow carrying out a consistent control of the arriving people (Buiter, Rahbari & Schulz 2016).

Moreover, there is an assumption that the collaboration between the UK and the EU in the terms of security will continue even if the former chooses to leave. The only difference will reside in the fact that the government will be able to determine the terms of entering, which is critical for the British safety ( EU referendum 2016).

An opposite opinion suggests that the Brexit will have a negative outcome for the country’s safety as the latter will be deprived of the security facilities that the EU offers such as NATO and the United Nations (Buiter, Rahbari & Schulz 2016).

In addition, the relevant point of view is supported by the fact that as long as the UK is the EU member it is enabled to exchange important criminal records and collaborate closely with other EU countries (Dabrowski 2016). As soon as it leaves, the collaboration will have to slow down.

Overall Impact

Despite the fact that the impact of Brexit on the British economy is hardly predictable, the analysis of particular economic aspects allows drawing a series of general conclusions:

• Any extreme claims made about the outcomes of Brexit for the national economy is ungrounded – the analysis of every sector shows that leaving the EU has both positive and negative consequences.
• There is a possibility that Brexit will have a negative impact on the job market due to the difficulties it will create for the immigrant flows.
• There is a chance that Brexit will have a positive influence on the regulation of immigrants – the country will be enabled to implement essential restrictions on its own, which is apt to increase the security level.
• There is a large uncertainty in the investment sector – analysts cannot predict how foreign investors will behave in case the country is no more a part of the union.
• There are potential advantages for the British economy in trade terms – the country will receive more freedom in decision making. In the meantime, it will also be deprived of the beneficial terms it now uses for exporting.
• From the budget perspective, Brexit has negative outcomes as Great Britain will stop receiving considerable financial assistance from the EU, which currently goes to poorer regions. In the meantime, the UK will be no more oblige to pay the membership contribution to the union.

The authoritative source, Woodford, has worked out a comparative analysis of the benefits and disadvantages of Brexit. Its results are represented in the table below.

The profound analysis of Brexit’s consequences has shown that the character of the outcomes cannot be referred to utterly negative or fully positive. Thus, every segment of the British economy is likely to experience all kinds of outcomes in case the country decides to leave the EU.

The main benefits that the UK is supposed to receive in case it leaves are connected with the immigration sector and the security assurance. Thus, will receive a chance to implement its own immigration limits and introduce a stricter entering policy in order to improve the national security.

In the meantime, the country is also sure to meet some challenges. Thus, the principal drawback of this decision is connected with the national budget that currently receives sustainable support from the EU, particularly in terms of poor regions. Moreover, the investment future also remains unclear. Specialists do not have a common opinion regarding the potential intensity of foreign investments in case Great Britain is no more the member of the EU.

The most ambiguous aspect is the trade segment. Hence, on the one hand, the country will get free from the single market’s regulations and will a chance to extend its trade to the new markets. On the other hand, there some concerns about the importing sector that might experience the negative impact from the Brexit.

A background guide to “Brexit” from the European Union 2016.

Amlôt, M 2016, QNB Research reviews the economic consequences of Brexit .

Booth, S, Howarth, C, Persson, M, Ruparel, R & Swidlicki, P 2015, What if…? The Consequences, challenges & opportunities facing Britain outside EU.

Boulanger, P & Philippidis, G 2015, ‘The End of a Romance? A Note on the Quantitative Impacts of a ‘Brexit’ from the EU’, Journal of Agricultural Economics , vol. 66, no. 3, pp. 832-842.

Brexit could benefit UK economy, says £8bn fund manager 2016.

Brexit ‘would trigger economic and financial shock ‘ for UK 2016.

Buiter, W, Rahbari, E & Schulz, C 2016, ‘ The implications of Brexit for the rest of the EU ‘, VOX.

Campos, N & Coricelli, F 2015, ‘ Some unpleasant Brexit econometrics ’, VOX.

Capital Economics for Woodford Investment Management 2016, The economic impact of “Brexit”.

Center for European Reform 2014, The economic consequences of leaving the EU .

Chu, B 2012, ‘ What if Britain left the EU? ’, The Independent.

Dabrowski, M 2016, Brexit and the EU-UK deal: consequences for the EU .

Dhingra, S, Ottaviano, G & Sampson, T 2015, Should We Stay or Should We Go? The economic consequences of leaving the EU 2015.

EU referendum 2016.

Giles, C 2016, What are the economic consequences of Brexit .

Global Counsel 2015, BREXIT: the impact on the UK and the EU.

Petersen, T, Schoof, U & Felbermayr, G 2015, ‘ Brexit – a losing deal for everybody ’, ESharp .

Springford, J & Whyte, P 2014, The consequences of Brexit for the City of London .

Wintour, P 2016, ‘ How will the EU referendum work? ’, The Guardian .

Wood, B 2016, ‘Why the markets fear Brexit’, The Economist.

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EU’s Role and Reaction to Brexit Essay

Introduction, background information, eu’s role in brexit, eu’s reaction to brexit.

While there is an abundance of studies that focus on Brexit, most of the focus on the United Kingdom (UK) rather than discussing the European Union (EU), the EU is an international organization, which is considered a unified trade and monetary body of 28 countries, including the UK, which aims at making the members of the union more competitive in the global arena. While the EU is one of the primary actors of Brexit since it participates in the negotiations as one of the parties, it can be considered as the primary reason for the start of the process. Due to an increase in powers of the EU government, the UK experienced considerable economic, social, and political complications. Additionally, the EU’s technocratic and neoliberal approach to policy-making produced disinterested, elite-led EU institutions. The EU reacted to the matter by acknowledging its priorities by assessing the needs of its member-states. The paper argues that the EU needs to design and implement reformed policies to maintain stability in the region.

In 2016, the world was shocked by the result of the public vote held in the United Kingdom (UK), which favored leaving the European Union (EU). After the referendum, the UK initiated a process of exiting the EU that is commonly known as “Brexit.” Even though there are those who support the matter and those who hate it, not a single person in Europe remained untouched by the matter. Is this for real? Is it even possible to leave the EU? Will other countries follow? These are only a few of the questions that have been around since the referendum day. However, the complexity of the procedure and negotiations making these questions linger.

Even though the process started three years ago, it is still underway due to the complexity of the matter and failure to find an agreement on the crucial points of the deal. The event had considerable implications for the UK, the EU, and the rest of the world. While there is an abundance of studies concerning Brexit, most of them focus on the UK, and there is hardly any discussion about what are the implications of the matter for the EU. The present paper offers an analysis of the EU’s role and reaction to the event. First, it offers background information defining Brexit and the EU. Second, the report discusses the EU’s role in Brexit, viewing the EU as a cause and as an actor. Third, the paper describes the economic, political, and social reactions to the event. The report concludes that the EU needs to change its policies in order to maintain stability in the region.

Brexit is a word used to identify the process initiated by the UK to withdraw from the EU. The word “Brexit” is a blend of two words, “British” and “exit,” which is widely used by the press. The process officially started in 2016, when the referendum made it clear that a small minority of 51.9 percent voted for leaving the EU (Hobolt, 2016). The referendum split the nation almost in half, where the majority felt that the EU threatened the autonomy of the UK and obstructed its long-term economic development (Ramiro Troitiño, Kerikmäe, & Chochia, 2018). Even though the long-term results of the process remain unclear, the short-term outcomes were almost immediate. According to Hobolt (2016), the market reacted to the event quickly, with the British pound falling against the US dollar to a 31-year minimum, while “over 2 trillion dollars were wiped off shares globally” (p. 1259). Moreover, British Prime Minister David Cameron resigned almost immediately, and Scotland signaled that in the case of Brexit, Scotland was ready to leave the UK (Hobolt, 2016). The initial reaction to the event was immediate; however, everything slowed down.

Even though the process started in 2016, it is still in progress since it was extended several times. According to Ramiro Troitiño et al. (2018), the original deadline was on March 29, 2019; however, the UK and the EU failed to reach an agreement on vital points. In particular, there is no certainty about the border with the Republic of Ireland, which led to several revisions of the initial Brexit Deal proposed by Theresa May (Ramiro Troitiño et al., 2018). After May’s resignation, Boris Johnson, the new Prime Minister of the UK, offered a new deal that was to be approved on October 17, 2019 (Ramiro Troitiño et al., 2018). The final agreement proposed that the UK should leave the customs union, while Northern Ireland will remain an entry point into the EU’s customs zone. The agreement also described the rights of the UK and the EU citizens and the fee the UK was to pay to the EU (Ramiro Troitiño et al., 2018). Before moving to the discussion of the event, it is also beneficial to learn about the European Union.

European Union

The EU is an international organization, which is considered a unified trade and monetary body of 28 countries, including the UK. The purpose of the organization is to make its members more competitive in the global economic arena (Dinan, 2017). The EU allows the free flow of people and goods between the countries with random checks. While members of the EU retain a certain degree of autonomy, they are to oblige to the regulations promoted by the centralized government. Three bodies govern the EU, including the EU Council, the European Parliament, and the European Commission. The EU council proposes new legislation; the European Parliament discusses the suggested laws and decides if they should be approved, and the European Commission is responsible for executing the policies (Dinan, 2017). The EU also uses a unified currency, the Euro, which all the members pledged to adopt. However, nine of the countries, including the UK, have failed to do so. In order to appreciate the long-term relationships between the UK and the EU, it is beneficial to consider the history of the organization.

The EU has a long history of successful economic and political cooperation with its member-states. The concept of the EU was initially introduced in 1950 when the concept of a European trade area was formulated (Dinan, 2017). The prototype of the EU, the European Coal and Steel Community, had six founding members, including Belgium, France, Germany, Italy, Luxembourg, and the Netherlands (Dinan, 2017). Since then, many treaties have increased the number of members and the sphere of influence of the organization. One of the most recent agreements, the Treaty of Lisbon, has considerably increased the power of the European government by expanding its jurisdiction on border control, immigration, and judicial cooperation in civil and criminal matters (Dinan, 2017). The growing centralization of power and economic stagnation made many UK citizens concerned since it threatened the sovereignty and prosperity of the nation (Dinan, 2017). Therefore, the country started considering leaving the union to remain financially and politically empowered.

EU as a Cause

As stated above, the EU’s excessive interventions into political and economic matters of its members were the primary reason for mistrust and fear of the UK citizens. The cornerstone of the matter became the EU’s migration laws, which required the members to admit immigrants from various non-European countries for ethical reasons (Ramiro Troitiño, 2018). Such policies became harmful for most of the countries in many aspects. For instance, before the vote, UK citizens suffered from financial problems caused by permissive immigration laws (Tilford, 2015). In fact, the real wages of UK citizens, especially those on low wages, fell sharply since immigrants take the majority of low-paid jobs (Tilford, 2015). Moreover, the UK’s lagging in housing has increased the prices of real estate since more people were arriving from other countries to compete for new homes (Tilford, 2015). Finally, increased immigration pressured the National Healthcare System and the education services (Tilford, 2015). Even though all the reasons listed above may be the result of the UK’s government being slow to react to a rapidly changing environment, the public blamed the immigrants, and consequently the EU, for these problems.

So, why is immigration is such a crucial matter for citizens of the UK? Empirical research by Matti and Zhou (2016) aimed at analyzing different sets of characteristics elaborated on an alternative view on the reasons for Brexit. According to their study, the primary reason for the vote being slightly favoring exiting the union was the aging population of the country (Matti & Zhou, 2016). The scholars argue that “an aging UK population seeking isolation from the national, racial and religious diversity associated with globalization” (Matti & Zhou, 2016, p. 1134). Even the findings are not consistent with the ideas of other experts; it gives further insight into the EU’s role in the matter. Since centralized governments are unable to meet all the diverse needs of the population, they are prone to being bias and favor one group of stakeholders. According to Ramiro Troitiño et al. (2018), Germany enjoyed most of the economic and social benefits of the EU’s policies, while citizens of other countries felt underserved. However, the EU’s role in Brexit is not limited by being a cause of the matter.

EU as an Actor

Apart from being the reason for the matter, the EU is also one of the primary actors of Brexit. The organization represented one of the competing sides during the negotiations about the terms of the treaty. The aim of the EU in the negotiations is to serve the citizens of its member-states by creating job openings and securing economic stability and development (Ott & Ghauri, 2018). Therefore, the organization had to consider the public opinion of all its members to identify its strategy during the negotiations. According to Stockemer (2018), 80% of European society wanted to maintain close economic cooperation with the UK. At the same time, the majority of the European countries believed it was necessary to maintain control of the country’s borders. However, the UK’s objective was different from that of the EU’s, and a deal had to be found. The EU is an actor in the situation since it is actively searching for a consensus through repetitive negotiations.

Even though the final agreement about Brexit was achieved in October 2019, after the referendum, it was unclear whether the UK would leave the union. Since the long-term effects of the matter were unclear and the short-term implications were disastrous, the EU did its best to stagnate the dialogue between the parties. Stockemer (2018) argues that due to the complexity of the situation and lags in the negotiations, Brexit may not happen. Even though the EU’s attitude about Brexit is uncertain, the press suggests that the organization does not want the country to leave the union (Ott & Ghauri, 2018). Therefore, the stagnation in Brexit’s progression may be due to the EU’s silent opposition to the matter. In other words, the organization acts to support its interest by inaction and obstructing the development of the deal. Will that be effective? Unfortunately, no one knows, but the EU was quick to react to the event.

Political Reaction

The reaction to Brexit around the globe hardly differed since it came as a shock to the international society. The EU was not an exception, and the majority of officials were confused in their first assessments of the event (Hobolt, 2016). Soon, the confusion was changed by alarm about the future of the organization. The reason the UK is leaving the union was a rise of neo-nationalistic moods and populism of the politicians (Corbett & Walker, 2018). Has Europe not learned the lessons of fascism and World War II? Such tendencies in society were considered to be evidence of the poor social policies of the organization. Research conducted by Corbett and Walker (2018) suggests that the reason for social disturbance is the EU’s technocratic and neoliberal approach to policy-making. Therefore, the de-politicization of European integration and limitation of liberal democracy have produced disinterested, elite-led EU institutions (Corbett & Walker, 2018). The organization acknowledged its need to change the imperatives to social justice and democracy. In short, Brexit has made the EU realize that reformation of the approach is needed to avoid further complications and loss of other member-states.

As a result, many programs have emerged aimed at stabilizing the situation in the EU. According to Galbraith (2016), the hope for the organization lies in the Democracy in Europe Movement 2025. The purpose of the movement is to create a pan-European democratic and social-democratic alliance, which will establish a popular democracy on the European level (Galbraith, 2016). If no adequate reform follows, the implication for the political influence of the organization may fade away. That will create geopolitical space for new parties to increase their impact on the region, including the US, China, and Russia (Galbraith, 2016). The refugees will continue to create immigration problems since there are conflicts in Ukraine, Syria, Iraq, Iran, Libya, Yemen, and Afghanistan. Since the EU understands that, it began to change its priorities to address the political problems demonstrated by Brexit.

Economic Reaction

The EU’s economic sector was also quick to react to Brexit. The UK is one of the world’s largest economies, and the loss of such a member is sure to destabilize both parties. Therefore, the EU’s reaction was to quickly establish the priorities in economic relationships between the two parties. At the same time, the EU estimated the possible implications of the event and made the UK pay the so-called “diverse bill” of £39bn (Ramiro Troitiño, 2018). Even though this money will not compensate for all the possible losses associated with Brexit, it may be used to elaborate and execute new policies to stabilize the economy inside the EU.

Will Euro survive? The experts say that under current circumstances, it will not (Galbraith, 2016). One of the possible ways of rebuilding the Eurozone is to make Euro prevalent in the North while letting weaker economies have their own currencies (Galbraith, 2016). Even though there are opinions that Euro will collapse altogether, it is favored by a minority of experts and is hardly believable. At the same time, there surely will be small changes that will have extensive consequences.

The EU had to make minor arrangements to ensure the efficient operation of the economy. Moreover, the EU has prepared to move the European banks from the UK since Brexit will end the free movement of persons to other European nations (Galbraith, 2016). The absence of free movement of people will limit the access to banks of EU citizens since they will not be able to go to the UK without a visa. Moreover, neither the goods nor the money will be able to travel without additional fees. The decision about where the banks will move will rebalance the economy inside the EU. According to Galbraith (2016), the primary beneficent of the matter is expected to be Italy, since it “has done the most, if quietly and so far without great effect, to bend the fiscal rules to try to staunch the ongoing decline of its economy” (p. 165). At the same time, France and Greece are likely to suffer from considerable economic implications of the rebalance (Galbraith, 2016). The EU will make changes in the balance of powers to ensure long-term financial stability. However, economic implications are minor compared to social reactions.

Social Reaction

After the start of Brexit, the EU has faced many challenges and issues in various spheres apart from the economy. The article by Mazzilli and King (2019) reveals the problems of migrants from the EU living in the UK. According to the article, the majority of the Europeans living in Britain became angry and felt betrayed by the Brexit vote because it was clear that UK citizens voted not against the EU but against the immigrants (Mazzilli & King, 2019). The EU had to recognize and address the problem in order to maintain stability in the region.

The EU members were concerned about the future of scientific collaborations among British and European scientists. Vousden (2019) argues that the majority of success in research is due to close relationships between the nations of the EU. Therefore, the EU has emphasized the importance and expressed a desire to keep working together with the UK when it comes to science (Vousden, 2019). In other words, the EU reacted to Brexit by quickly setting new priorities for preventing social issues and the problem with collaboration in science.

Brexit has enormous implications for the UK, the EU, and the rest of the world. The EU can be viewed both as a cause and an actor in regard to the matter. Brexit demonstrates how neo-nationalistic slogans, populism, and anti-globalization moods can lead to disastrous social, economic, and political consequences. The event revealed the inadequacy of the EU’s neoliberal and technocratic policies. The EU needs to develop a plan for sustaining the growing tension in the region to prevent other member states from leaving the union since many Europeans feel betrayed and angry about the event. The primary strategy for addressing the matter is by creating an alliance that will establish a popular democracy on the European level. Additionally, the EU needs to restructure its relationships with the UK in order to preserve close relationships in the scientific and economic spheres.

Corbett, S., & Walker, A. (2018). Introduction: European social policy and society after Brexit: Neoliberalism, populism, and social quality. Social Policy and Society, 18 (1), 87–91. Web.

Galbraith, J. (2016). Europe and the world after Brexit. Globalizations, 14 (1), 164–167. Web.

Dinan, Desmond. (2017). Europe recast: History of the European Union (2nd ed.). London, UK: Red Globe Press.

Hobolt, S. B. (2016). The Brexit vote: A divided nation, a divided continent. Journal of European Public Policy, 23 (9), 1259–1277. Web.

Matti, J., & Zhou, Y. (2016). The political economy of Brexit: explaining the vote. Applied Economics Letters, 24 (16), 1131–1134. Web.

Mazzilli, C., & King, R. (2019). “What have I done to deserve this?” Young Italian migrants in Britain narrate their reaction to Brexit and plans to the future. Rivista Geografica Italiana , 125 (4), 507-523.

Ott, U., & Ghauri, P. (2018). Brexit negotiations: From negotiation space to agreement zones. Journal of International Business Studies , 50 (1), 137-149. Web.

Ramiro Troitiño, D., Kerikmäe, T., & Chochia, A. (2018). Brexit . Cham, Switzerland: Springer.

Stockemer, D. (2018). The Brexit negotiations: If anywhere, where are we heading? “It is complicated.” European Political Science , 18 (1), 112-116. Web.

Tilford, S. (2015). Britain, immigration and Brexit. CER Bulletin , 30 , 64-65.

Vousden, K. H. (2019). Brexit negotiations: What is next for science? EMBO Reports, e48026. Web.

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How to Write an Essay Introduction | 4 Steps & Examples

Published on February 4, 2019 by Shona McCombes . Revised on July 23, 2023.

A good introduction paragraph is an essential part of any academic essay . It sets up your argument and tells the reader what to expect.

The main goals of an introduction are to:

• Catch your reader’s attention.
• Give background on your topic.
• Present your thesis statement —the central point of your essay.

This introduction example is taken from our interactive essay example on the history of Braille.

The invention of Braille was a major turning point in the history of disability. The writing system of raised dots used by visually impaired people was developed by Louis Braille in nineteenth-century France. In a society that did not value disabled people in general, blindness was particularly stigmatized, and lack of access to reading and writing was a significant barrier to social participation. The idea of tactile reading was not entirely new, but existing methods based on sighted systems were difficult to learn and use. As the first writing system designed for blind people’s needs, Braille was a groundbreaking new accessibility tool. It not only provided practical benefits, but also helped change the cultural status of blindness. This essay begins by discussing the situation of blind people in nineteenth-century Europe. It then describes the invention of Braille and the gradual process of its acceptance within blind education. Subsequently, it explores the wide-ranging effects of this invention on blind people’s social and cultural lives.

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Table of contents

Step 1: hook your reader, step 2: give background information, step 3: present your thesis statement, step 4: map your essay’s structure, step 5: check and revise, more examples of essay introductions, other interesting articles, frequently asked questions about the essay introduction.

Your first sentence sets the tone for the whole essay, so spend some time on writing an effective hook.

Avoid long, dense sentences—start with something clear, concise and catchy that will spark your reader’s curiosity.

The hook should lead the reader into your essay, giving a sense of the topic you’re writing about and why it’s interesting. Avoid overly broad claims or plain statements of fact.

Examples: Writing a good hook

Take a look at these examples of weak hooks and learn how to improve them.

• Braille was an extremely important invention.
• The invention of Braille was a major turning point in the history of disability.

The first sentence is a dry fact; the second sentence is more interesting, making a bold claim about exactly  why the topic is important.

• The internet is defined as “a global computer network providing a variety of information and communication facilities.”
• The spread of the internet has had a world-changing effect, not least on the world of education.

Avoid using a dictionary definition as your hook, especially if it’s an obvious term that everyone knows. The improved example here is still broad, but it gives us a much clearer sense of what the essay will be about.

• Mary Shelley’s  Frankenstein is a famous book from the nineteenth century.
• Mary Shelley’s Frankenstein is often read as a crude cautionary tale about the dangers of scientific advancement.

Instead of just stating a fact that the reader already knows, the improved hook here tells us about the mainstream interpretation of the book, implying that this essay will offer a different interpretation.

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Next, give your reader the context they need to understand your topic and argument. Depending on the subject of your essay, this might include:

• Historical, geographical, or social context
• An outline of the debate you’re addressing
• A summary of relevant theories or research about the topic
• Definitions of key terms

The information here should be broad but clearly focused and relevant to your argument. Don’t give too much detail—you can mention points that you will return to later, but save your evidence and interpretation for the main body of the essay.

How much space you need for background depends on your topic and the scope of your essay. In our Braille example, we take a few sentences to introduce the topic and sketch the social context that the essay will address:

Now it’s time to narrow your focus and show exactly what you want to say about the topic. This is your thesis statement —a sentence or two that sums up your overall argument.

This is the most important part of your introduction. A  good thesis isn’t just a statement of fact, but a claim that requires evidence and explanation.

The goal is to clearly convey your own position in a debate or your central point about a topic.

Particularly in longer essays, it’s helpful to end the introduction by signposting what will be covered in each part. Keep it concise and give your reader a clear sense of the direction your argument will take.

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As you research and write, your argument might change focus or direction as you learn more.

For this reason, it’s often a good idea to wait until later in the writing process before you write the introduction paragraph—it can even be the very last thing you write.

When you’ve finished writing the essay body and conclusion , you should return to the introduction and check that it matches the content of the essay.

It’s especially important to make sure your thesis statement accurately represents what you do in the essay. If your argument has gone in a different direction than planned, tweak your thesis statement to match what you actually say.

To polish your writing, you can use something like a paraphrasing tool .

You can use the checklist below to make sure your introduction does everything it’s supposed to.

Checklist: Essay introduction

My first sentence is engaging and relevant.

I have introduced the topic with necessary background information.

I have defined any important terms.

My thesis statement clearly presents my main point or argument.

Everything in the introduction is relevant to the main body of the essay.

You have a strong introduction - now make sure the rest of your essay is just as good.

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• Literary analysis

This introduction to an argumentative essay sets up the debate about the internet and education, and then clearly states the position the essay will argue for.

The spread of the internet has had a world-changing effect, not least on the world of education. The use of the internet in academic contexts is on the rise, and its role in learning is hotly debated. For many teachers who did not grow up with this technology, its effects seem alarming and potentially harmful. This concern, while understandable, is misguided. The negatives of internet use are outweighed by its critical benefits for students and educators—as a uniquely comprehensive and accessible information source; a means of exposure to and engagement with different perspectives; and a highly flexible learning environment.

This introduction to a short expository essay leads into the topic (the invention of the printing press) and states the main point the essay will explain (the effect of this invention on European society).

In many ways, the invention of the printing press marked the end of the Middle Ages. The medieval period in Europe is often remembered as a time of intellectual and political stagnation. Prior to the Renaissance, the average person had very limited access to books and was unlikely to be literate. The invention of the printing press in the 15th century allowed for much less restricted circulation of information in Europe, paving the way for the Reformation.

This introduction to a literary analysis essay , about Mary Shelley’s Frankenstein , starts by describing a simplistic popular view of the story, and then states how the author will give a more complex analysis of the text’s literary devices.

Mary Shelley’s Frankenstein is often read as a crude cautionary tale. Arguably the first science fiction novel, its plot can be read as a warning about the dangers of scientific advancement unrestrained by ethical considerations. In this reading, and in popular culture representations of the character as a “mad scientist”, Victor Frankenstein represents the callous, arrogant ambition of modern science. However, far from providing a stable image of the character, Shelley uses shifting narrative perspectives to gradually transform our impression of Frankenstein, portraying him in an increasingly negative light as the novel goes on. While he initially appears to be a naive but sympathetic idealist, after the creature’s narrative Frankenstein begins to resemble—even in his own telling—the thoughtlessly cruel figure the creature represents him as.

If you want to know more about AI tools , college essays , or fallacies make sure to check out some of our other articles with explanations and examples or go directly to our tools!

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Your essay introduction should include three main things, in this order:

• An opening hook to catch the reader’s attention.
• Relevant background information that the reader needs to know.
• A thesis statement that presents your main point or argument.

The length of each part depends on the length and complexity of your essay .

The “hook” is the first sentence of your essay introduction . It should lead the reader into your essay, giving a sense of why it’s interesting.

To write a good hook, avoid overly broad statements or long, dense sentences. Try to start with something clear, concise and catchy that will spark your reader’s curiosity.

A thesis statement is a sentence that sums up the central point of your paper or essay . Everything else you write should relate to this key idea.

The thesis statement is essential in any academic essay or research paper for two main reasons:

• It gives your writing direction and focus.
• It gives the reader a concise summary of your main point.

Without a clear thesis statement, an essay can end up rambling and unfocused, leaving your reader unsure of exactly what you want to say.

The structure of an essay is divided into an introduction that presents your topic and thesis statement , a body containing your in-depth analysis and arguments, and a conclusion wrapping up your ideas.

The structure of the body is flexible, but you should always spend some time thinking about how you can organize your essay to best serve your ideas.

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The Legal and the Literary: Cultural Perspectives on Brexit

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The essay introduces a special issue on Brexit. Instead of merely focusing on its legal implications, this issue undertakes an examination of the UK leaving the EU from a law-and-humanities perspective. The legal analysis is therefore complemented by a broader assessment of the social and cultural features of Brexit, also extending over the complexity of the present and the incertitude posed by its future. Brexit is also a matter of reimagination; constitutional and literary issues thus coalesce towards a transdisciplinary dialogue. To this extent, the collected essays engage with Brexlit, i.e. novels and essays, political pamphlets, and other writings prompted by Brexit. The aim is to explore the doubts, fears, and threats that still haunt the UK after leaving the EU, paying particular attention to the development of new narrative strategies and forms capable of reflecting and giving expression to the new Brexit identities.

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Another Focus on Brexit?

Readers and scholars may legitimately ask themselves this question when surfing the current issue of the Liverpool Law Review . We all know that the topic has ignited a debate going above and beyond the limits marked by our academic speculations. Slogans such as ‘Take back control’, ‘Get Brexit done’, and ‘We send the EU £350 million a week – let’s fund our NHS instead’ testify to the impact Brexit has had on the public sphere, putting under stress the bonds of the British political community. Slogans like these were cunningly drafted to gain the consensus of the British electorate, which had distrusted the UK political class and institutions for decades. The way Brexit was made is nothing more than a variant of ‘populism … and feeds on this distrust’ Footnote 1 . At the same time, the act of leaving the EU is a ‘major constitutional change’, as the UK Supreme Court stated in its seminal Miller judgement in 2017. Footnote 2 Therefore, Brexit was (and still is) styled as a real ‘constitutional moment’. Footnote 3 For the sake of accuracy, it is one of those constitutional moments that happen once in lifetime.

In Spring 2023, though, the echoes of the often harsh and divisive social, legal, cultural, and political debates surrounding it seem to have faded away. Gone are the days of the protracted parliamentary debates that made it necessary to amend the statutory definition of ‘exit day’ three times to avoid crashing out of the EU in a hard-Brexit mood. The European Union (Withdrawal Agreement) Act 2020 allowed ‘exit day’ to eventually enter British constitutional reality on January 31st, 2020. Gone were also the days when the UK-EU relations had been ‘fractious and difficult’, as the then PM Boris Johnson put it. According to him, the 2020 EU-UK Trade and Cooperation Agreement (TCA) inaugurated a new era of friendship and mutual trust: ‘We will be your friend, your ally, your supporter and your number one market’, he declared when announcing the TCA on Christmas Eve of 2020. Footnote 4 With its proposed amendments to the Northern Ireland Protocol, the 2023 ‘Windsor Framework’ put the finishing touches on the renewed EU-UK relationship. And the House of Lords’ amendments to the most contentious parts of the Retained EU Law (Revocation and Reform) Bill seem to have boosted these relationships on either side of the Channel. Footnote 5

So, ‘Why a New Focus on Brexit’?

Among the many reasons that may be given, Giuseppe Martinico observes that one is related to being ‘Brexit … also a landmark event in the characterisation of the relationship between the EU and its Member States’. ‘Even after Brexit’, he acutely pinpoints, ‘the inextricable knot that the membership created will not vanish magically in one blow’. From the standpoint of the continentals, its ‘legacy … is destined to last beyond the individual case of the UK’, thus triggering manifold constitutional issues as regards the EU composite legal order. Footnote 6 What we understand is that ‘Brexit is impossible to attain by listening only to British voices’, Silvia Pellicer-Ortín correctly argues; consequently, its assessment should indeed ‘include the numerous agents configuring the post-Brexit scenario’. Footnote 7 In our opinion, indeed, both the UK and the EU need ‘new narrative forms capable of reflecting’ their often conflicting, albeit complementary, new emerging Brexit identities. It does not come as a surprise, therefore, that the ‘inextricable knot’ encompassing the UK-EU-Member States relations will continue to be part of what Laura A Zander and Nicola Kramp-Seidel term the transdisciplinary voices in conversation about the past, present, and future of the very idea of Europe. Footnote 8

There is a further reason that justifies our research on Brexit. A few lines above we have labelled it as a constitutional moment that happens once in lifetime. That usually happens, we must add, once in lifetime. The last three years have been ‘a stage … turbulent and troublesome’. Footnote 9 Our societies have constantly been challenged by once-in-a-lifetime events. Together with Brexit, the pandemic, the war in Ukraine, the death of Elizabeth II, and the Coronation of Charles III are (often non-legal) factors that have undermined the conventional forms through which the British have traditionally conceived of themselves.

Has the time come for reimaging Britain? Well, in a way, it has. Justin Welby, the Archbishop of Canterbury, has dedicated a book to Reimagining Britain : ‘The British vision for our diversity and for human flourishing requires … wide-leadership and imagination’ to knit together ‘the context of our past, the threats and difficulties of the present, and … faithfulness to our future’. Footnote 10 It is not only a matter of EU-UK relations; the very identity of Britain is at stake, as a global actor and in its relations with its former Empire and the rest of the world. Footnote 11 It is also a process of reimagination that encompasses the British people and the way they conceive of (and write) their own Constitution, also extending over the complexity of the present and the incertitude posed by its future. All these relations, we assume, are a matter of identities, which constantly interact with the broader social, political, and cultural scenario.

The reasons are therefore legal, social, cultural, and geographical. On the one hand, as Robert Tombs puts it, Britain has traditional located itself ‘in and out of Europe’, both politically and imaginatively. Politically , its joining the European Bloc was made up of several opting outs: from the Schengen acquis, from the Economic and Monetary Union, from the area of freedoms, security and justice, and from the Charter of Fundamental Rights. Footnote 12 Imaginatively , the UK is not ‘bound by land to other countries’, which makes it ‘particular in its ability to imagine itself … precisely because it is an island, and its status as an island, surrounded and enclosed by water, corresponds metaphorically with the medieval hortus conclusus. Footnote 13 Set, as it is, ‘in a Silver sea’, the island – Silvia Pellicer-Ortín reminds us – ‘has never been invaded’. Footnote 14 Brexit is therefore a redolent narrative of nostalgia, an inward-looking journey through its inner self.

The Journey: Brexit Between Law and Humanities

When we decided to undertake this research on Brexit, we understood that the inextricable knot of relations and identities could not be governed only by technicalities. A good dose of reimagination was required.

What we proposed to our colleagues joining the project was to tour the island. To be honest, all the essay collected in this special issue mainly revolve around the condition of England. We all know that the decision to leave the EU was mainly English – and, partly, Welsh. Indeed, ‘the hard-Brexit approach substantiates’, as Matteo Nicolini clarifies in his essay, ‘the Anglo-British vision of an alternative destination’ of the British Isles ‘out of Europe’. Footnote 15 To put it differently, ‘Brexit was made in England’. Footnote 16 In geographical terms, this meant undertaking ‘a Journey in search of a country and its people’, as Stuart Maconie writes in his compelling revisitation of Priestley’s English Journey ( 1934 ), which is a ‘key text in understanding England’. Footnote 17

Our touring the country required additional efforts, because it meant also touring – metaphorically, at least – the ‘tangled complexity’ of the UK leaving the EU through a variety of novels that imagined new British identities.

Within the ‘ongoing conversation Britain is continuing to have with itself’, we suggested our colleagues to read, mark, and digest novels and essays, political pamphlets, and other writings prompted by Brexit to explore the ‘existing cultural imaginaries and patriotic attachments’ that still haunt the UK after leaving the EU. Footnote 18

Brexit has indeed generated a vast body of literature, also called BrexLit , which addresses the divides and the many pre-existing divisions that Brexit has revealed in all their complexity. As Silvia Pellicer-Ortín argues, ‘some of these works establish an antagonistic Leave or Remain dichotomy, … but perhaps not necessarily productive in terms of reducing the divisions in society or even generating compassion for the opposition’. Footnote 19 Books such as Ali Smith’s Autumn ( 2016 ), Grant’s A Stranger City ( 2019 ), Coe’s Middle England ( 2018 ), McEwan’s The Cockroach ( 2019 ), and Craig’s The Lie of the Land ( 2017 ) – to quote just a few – are located in a Brexit scenario. Yet, all these novels engage in a dialogue with Britain’s history, literary past and current popular culture. This is, on its own, another area where the technicalities of Brexit were challenged and revised.

This was indeed the background within which contributors were invited to explore one or more features of the multifaceted Brexit conundrum, as well as to tour the various fields indicated above.

Narrative and Identity

The social and political events of the twentieth and twenty-first century have affected our perceptions of Europe. Its universalising idea has undergone multiple processes of fragmentation and reconstitution, determining new imaginaries and symbolical values. The Europe of Brexit is rooted in the key concept of borders as a liminal space oscillating between a geopolitical meaning and a threshold one, with its implication of passage and union. Usually intended as markers of national sovereignty and identity, borders do not simply imply processes of exclusion, but ‘produce differentiation and stratification of legal [and cultural] statuses and subjectivities’. Footnote 20 They are cultural markers, ‘scaped’ Footnote 21 , and as such they are open to recontextualization, as well as transgressions. They are accompanied by national narratives, rooted in specific cultures, which form an imagined community, a social construct people identify with and which shapes their collective identity. Footnote 22 Brexit aimed to counterpose a ‘EU concept’ intended as a common narrative against a fractured Europe; as Laura A Zander points out in her contribution to the present focus, this has implicitly defined EU borders as ‘Fortress Europe’, rejecting attempts at border crossings. Brexit therefore acted as a looking glass, rooting itself in a concept of b/orders Footnote 23 , explicitly rejecting experiences of movement and cultural encounters that can reshape ideas of the nation and offering an ethnocentric perspective which counterposed Britain to Europe. In this way, Europe is ‘othered’ and the British self is defined in opposition to it, thus rejecting a relational conception of borders which has characterised the twenty-first century globalised world. Footnote 24

As Jeanne Gaakeer asserts, ‘Law is fond of boundaries’. Footnote 25 These ‘borderscapes’ embody specific cultural narratives which support and ground the territorial spatiality of the nation state. Footnote 26 As a matter of fact, they represent liminal zones that interrogate their underlying concept of division and the related oppositional conception of the citizen self. As Rosello and Wolfe observe, borders are an institution but also a process, as they are at the same time constituted both by society’s ‘grand narratives [of border formation] and performative ... narratives of border crossing’. Footnote 27 Borders acquire an ontological dimension as both their crossing or acceptance leads to an exploration of the self and a confrontation with Otherness, in a ‘performative negotiatio[n] of nations and their narration’. Footnote 28 As Christine Berberich points out, ‘[l]iterature … assumes a mythopoeic function as it helps create and perpetuate myths old and new alike’, and contributes to specific ‘notion[s] of community, belonging and (national) identity’. Footnote 29 Europe’s imaginaries are written and re-written according to the ongoing social and political changes. Literary works contribute to the imaginary of the nation; the novel itself has developed parallel to European nationalism Footnote 30 and it is now developing rearticulating different narrative strategies and genres to respond to the new Brexit scenarios and the current sociocultural changes by presenting a ‘cosmopolitan engagement’ vs a nationalistic perspective. BrexLit challenges ‘monolithic constructions of national identity’ Footnote 31 also by challenging and crossing literary borders.

As Matteo Nicolini asserts in his contribution to the present focus, Brexit started a time of crisis and political uncertainty which has triggered jurisgenerative processes, acts of reappropriation and reinterpretation of inherited legal knowledge. As a matter of fact, ‘Law participates in the production of meanings within the shared semiotic system of a culture, but it is also a product of that culture and the practices that reproduce it’. Footnote 32 In line with this, Brexit has affected the political, legal and cultural concepts of the British constitution; the law strives to ‘reimagine’, that is, ‘to renew existing legal frameworks and reinvigorate their relevance in the light of broader political and cultural change’. Footnote 33 In the same way, literature strives to ‘reimagine’ the individual self in this new social and political context. In line with the Anglo-Saxon conception of the law, imagination becomes a ‘cultural competence’ in legal practice Footnote 34 and also in a law and humanities approach.

The idea of fragmentation introduced by Brexit also involves its narrative forms, which engage with the psychogeographical idea of borders and the possibilities for their transgression. This creates a polyphony and palimpsestic perspective which challenges national identities, as Silvia Pellicer-Ortín points out in her contribution to the present focus centred on the figure of the immigrant. On the same line, Zander reflects on BrexLit’s strategies for erasing borders through the EFACIS Kaleidoscope series, thus named because of the kaleidoscope’s ability to introduce surprising configurations. Footnote 35 Such characteristic is rendered through a narrative structure that takes shape depending on the order of the reading of the stories; as Zander points out, ‘The reading of a single new contribution can change one’s view of others already familiar and vice versa’, Footnote 36 thus offering the reader the possibility for an active critical reflection and the experience of the liminal border of the self. The potential of the short story to cross borders in the act of reading Footnote 37 is further empowered by the networked structure of the project and confirms its effect to grant the acquisition of a narrative language, although still suspended within the borders of ‘the hostile language of immigration law’. Footnote 38

The fact that nationalism is based on processes of Othering has led also to a reinterpretation of the Gothic genre, itself characterised by the attention to spatial control and the threat of reverse colonisation, as Brexit Gothic. As Ilott points out, ‘Expulsion and abjection of the Other as a response to fears of literal invasion or challenges to national identity are central to the Gothic and its relationship to Englishness more broadly’. Footnote 39 Bram Stoker’s Dracula has been considered anticipatory of the current political and social issues with its fears of ‘dissolution of the nation, of society, of the human subject’ Footnote 40 and the tracing of Europe as a space of alterity/otherness. The threat of diasporic movements from the colonies and the neighbouring countries in the nineteenth century endangered the stability of the nation state and became embodied by a geopolitical enemy stigmatised as a primitive force, a vampire, that attacks the English centuries-long tradition of domination and needs to be contained through a strengthening of borders (concrete and metaphorical in the novel’s plot). Actually, the vampire is a foreign body that uncannily threatens the culturally established self and the boundary between self and other. Footnote 41 ‘By problematizing the boundaries [of the English empire]’, Arata observed, ‘Stoker probes the heart of culture’s sense of itself, its ways of defining and distinguishing itself from other peoples, other cultures, in its hour of perceived decline’. Footnote 42 This unsettling of the notions of boundaries is addressed also by novels which anticipate BrexLit, such as Helen Oyeyemi’s White is for Witching ( 2009 ), where a guesthouse actually tortures and expels foreign non-white workers and has been considered as an uncanny anticipation of contemporary immigration detention centres. The gothic tenets are employed to demarcate the boundaries that enclose law within its sovereign terrain, thus bestowing upon it an idea of purity. Footnote 43

As Sbiri, Nyman, Yassine point out, ‘the borderscape has also been represented as a Gothic space of death, a zombie border’, Footnote 44 where the identity of the migrant remains suspended, while instead it can lead to the exploration and acquisition of new identities in an analogous way to the establishment of the Gothic genre itself. As Chaplin observes, ‘on the borders of canonically marginalized works are found narratives of origin and statements of authorial intent designed to secure for the text a legitimate literary heritage’. Footnote 45

Moreover, the gothic sense of confinement into a stifling political context, a psychomachia of the protagonist which is embodied usually by the castle can be connected to the “retrotopia” Brexit revolves around, that is, in Bauman’s terms, the vision of a glorious past that does not seem to be “tied to the […] future” Footnote 46 , while narratives of identity “nee[d] to start in the past and pace [their] way to a future that embraces and resolves the discrepancies between past and present.” Footnote 47 Brexit seemingly tries to restore an idyllic ideal of the past and for this reason seems to mirror Boym’s definition of nostalgia (quoted by Bauman) as “a sentiment of loss and displacement, but […] also a romance with one’s own fantasy.” Footnote 48 The first part of the definition refers to the lack of a politically dominant position for Great Britain akin to the time of the English Empire. The cultural nation represented by Brexit thus becomes the state nation, in the context of an identity crisis that underlines its insularity more than the relationship with the EU upon which it is based. As Eaglestone asserts, “Britain has never really felt European, nor has the European Union stimulated the public imagination in the same manner as the Commonwealth or Empire” Footnote 49 which resurged through Brexit. Nostalgia implies the sharing of a collective memory and an emotional bonding dangerously confusing the imaginary vision with the real one, a return to national symbols and myths at the basis of resurgent nationalistic movements. Footnote 50 As Elber Aviram observes, British self-image revolved around the counterposition between Britain’s “liberty and civility and the violence and domination that were the realities of Empire” Footnote 51 .

Post Brexit scenarios are addressed also by science fiction, in line with the view of Brexit as “a dystopic, never-ending ‘season’ of disorientation, disconnection and division.” Footnote 52 The genre is characterised by a focus on “our own conditions of life in a new and potentially revolutionary perspective” Footnote 53 which stages the encounter with the Other and with difference. As Elber Aviram observes, science fiction can offer progressive alternatives to the binary logic of Brexit, which counterposes England and an imagined “European Other” and which can be considered “exemplar of the ways in which the avowed fictitiousness of the worlds of science fiction calls attention to the obfuscated fictitiousness of nation-states and the borders that define them.” Footnote 54 An example in this sense is represented by David Hutchinson’s Fractured Europe Quartet. In particular, the first novel of the series, Europe in Autumn ( 2014 ), introduces a context where independence referenda have led to a Europe fragmented into miriads of statelets. Footnote 55 The second novel, Europe at Midnight ( 2015 ) introduces the referendum for the UK withdrawal from the European Union, while the third novel, Europe in Winter ( 2016 ) presents the changes determined by the Brexit Referendum in the body politic of Europe which may lead to the breakup of the United Kingdom. The last novel of the quartet, Europe at Dawn ( 2018 ), shows the creation of concentration camps for refugees. In this dystopian scenario, the first novel, Autumn , introduces an alternative world which comes into existence in a parallel dimension through a computer cartography software. A map identifies the seat of the so-called Community, which creates a simulacrum of England based on the nineteenth century features of the country in an alternative dimension. As we read in the text,

Everyone in the Community was English. From one end of the Continent to the other. There were only English things here. There were no other languages, only regional dialects. No other cuisines but English. No other clothing styles but English. No other architectural styles but English. It was awful. Footnote 56

Also children’s literature has engaged in the representation of the new Brexit scenario, in particular by rewriting works set in an idealized British past, such as Bruno Vincent’s renditions of Enid Blyton’s Famour Five series of the 1950s, which have been addressed by Sidia Fiorato and Susan Honeyman in the present focus. Vincent transforms Kirrin island, the seat of the children’s adventures of the original texts into a symbolical reaction against Brexit by having the protagonists engage in a process of independence from Brexit UK, thus inverting the current political perspective. The text depicts dystopic scenarios and a journey into the self that leads the young readers to reflect upon the meaning of social community. Moreover, Lucien Young’s/Leavis Carroll’s Alice in Brexitland ( 2017 ) presents the conception of the new political scenario as a journey into a still fantastic world the young protagonist tries to interpret and ‘make sense’ of. Footnote 57 As Wyen asserts, ‘The parodies function as humorous coping mechanisms for a Brexit reality, but they also expose how the nostalgia associated with the charm of the originals becomes a political and social commentary for the 2016 Brexit campaign’. Footnote 58

Ali Smith’s Autumn ( 2016 ) is considered as the first post-Brexit novel and brings our reflections full circle. It traces the atmosphere that led to the 2016 referendum and its description of the aftermath of the referendum’s results is still applicable to the contemporary context;

All across the country, there was misery and rejoicing […] All across the country, people felt it was the wrong thing. All across the country, people felt it was the right thing. […] All across the country, people looked up Google: what is EU?’ […] All across the country, people said it wasn’t that they didn’t like immigrants. All across the country, people said it was about control. Footnote 59

The narrative addresses the question of borders with a concrete fence the protagonist’s mother attacks by throwing objects symbolical of people’s histories, in a metaphorical attempt at entering the liminal space through individual experience that asks for visibility. Zander defines Smith’s Seasonal Quartet as a kind of bridging fiction Footnote 60 over the ontological as well as the cultural chasm caused by Brexit. The work creates a liminal aesthetics engaging with ‘a dialectic between political borders and aesthetic orders’ Footnote 61 which highlights the connective potential of books.

Navigating Brexit. Issues and Essays

The focus begins with a real journey. We have already mentioned Maconie’s and Prestley’s journeys. Yet, the idea of touring the island (and England, more specifically) has ancient roots. In 1771, for example, Tobias Smollet published his The Expedition oh Humphry Clinker , which provides a choral description of England and Scotland through letters written by the characters of the book. In A Tour Through Brexit Britain , Ian Ward embarks on a different tour, namely of Brexit Britain in the company of the eighteenth-century writer Daniel Defoe, whose A Tour Through the Whole Island of Great Britain was published between 1724 and 1726. As Ward explains, Defoe’s Tour is a kind of a gentleman’s guide to the newly ‘United’ Kingdom of Great Britain. In revisiting Defoe’s Tour , Ward tests the integrity of this same union three centuries on through Britain’s tortured attempt to extricate itself from another Union, the European.

Matteo Nicolini embarks on a similar tour. In his ‘A symptom of an underlying condition’. Law and literature as a non-formalistic approach to Brexit , the tortured attempt to leave the EU is addressed as a constitutional and jurisgenerative moment. Nicolini’s reading of the UK leaving the EU departs from that traditionally used to assess its impact on the Anglo-British constitution. Politics and legalism – he argues – have trapped Britain in a formalistic approach without offering innovative responses to the challenges posed by Brexit, persuading the public that there are no alternatives to an out-of-Europe approach. Brexit requires less formalism and more attentiveness to its impact on British society. It is indeed pivotal to examine Brexit though the conditions underlying it, if we want to nurture the productive imagination needed to support Britain’s constitutional creativity during the post-Brexit scenario.

The tour through the UK’s inner self is also explored in Zander’s Unwriting Brexit? Bridging Fictions and Liminal Aesthetics within the UK’s Hostile Environment. In her opinion, Brexit is the embedment of the various frictions and fissures in contemporary European politics, which often aims at division rather than community. Brexit has revitalised the idea of Borders; as Zander explains, their creation, reinforcement, and protection seem to be a core aim of both the EU foreign policy with its related narrative of the ‘fortress Europe’, and the UK Hostile Environment policy. Yet, there is still a body of literature that aims at the erasure of borders, that seeks to bridge the existing ruptures within society and to reconcile the divided camps. Zander explores two literary projects: the EFACIS Kaleidoscope series which features various writers and artists from Ireland and their respective views on Europe; and Ali Smith’s Seasonal Quartet and Companion Piece , five novels that negotiate contemporary UK politics post Brexit. In this respect, both projects seem particularly suited to create a welcoming climate of solidarity, in order to unwrite, if not Brexit itself, at least some of its consequences.

The fractious outcomes of Brexit are at the heart of Silvia Pellicer-Ortín’s Fragmentation and Relationality in Brexit Narratives: Linda Grant’s A Stranger City. Pellicer assumes that Linda Grant’s A Stranger City is particularly illustrative of BrexLit. Unlike the majority of BrexLit novels, A Stranger City relinquishes the British perspective as it is concerned with the manifold experiences of various European citizens set in London against a background of xenophobia, nationalism and political tensions. A Stranger City also shows some narrative devices that characterise those newest fictions defined as fragmented narratives and networked novels to identify the tensions between fragmentation and relationality that have been visible at a political and social level in the wake of Brexit. In her opinion, this aspect seems to evoke a hopeful future in which the fragmented identities of post-Brexit Europeans have the possibility to flow in a more connected way than ever before. Division than populates Giuseppe Martinico’s The Lie of the Land: A Critical Legal Analysis by Amanda Craig . Although the book never explicitly mentions the topic of Brexit, it is an excellent description of the country’s division after the referendum of 23 June 2016, depicting a country threatened by populist tensions and sovereignism.

Last but not least, Sidia Fiorato and Susan Honeyman explore the way Brexit might frame the future, also shaping the imaginary of future generations. In Children’s Literature and National Consciousness: Bruno Vincent’s Five on Brexit Island ( 2016 ) and Five Escape Brexit Island ( 2017 ), Text by Enid Blyton , they explore Anderson’s imagined communities and its related process of storytelling, as well as the sharing of grounding myths and narratives for the creation of the symbolic space of the nation. Children’s literature focuses on the process of identity formation of its young readers and for this reason it has always been connected with models of social behaviour. By imaginatively engaging with the proposed narratives, the child experiences society’s and the nation’s embodied practices. Fiorato and Honeyman’s tour leads us to England, whose pastoral idyll mirrors a national identity rooted in its rural landscape and lifestyle. This rural imaginary usually associated to the South of England was exploited – or ‘harvested’, as Nicolini puts it in his essay – by Brexit supporters as embodying England’s original and independent identity. However, their essay also points to the instances of resistance to accepted worldviews through unconventional characters who foster a critical perspective on the issues at the centre of the narrative. The re-reading of Enid Blyton’s successful Famous Five series of the 1950s by Bruno Vincent focuses on Brexit’s narrative space to reflect upon the changes we are witnessing in our contemporary society and try to understand their sociocultural, economic, and political implications.

As is evident, our tour of Brexit is a pendulum swinging back and forth, between nostalgic images of Englishness and the idealisation of this past as projected into the future and reimagined through Brexlit. It is, then, a tour taking us also on either side of the Channel. Interestingly, this has become a place of encounter, where, as Phil Hubbard explains, identity and belonging are forged at the ‘edge of England’ and mainland Europe. Footnote 62

No wonder, therefore, if Charlie Connelly has entitled his recent book The Channel – not The English Channel. Footnote 63 With no adjectives. Our collection also aims to explore the topic navigating the Channel following alternative (and perhaps unchartered) stretches of open waters. This choice, in our ambition, might indeed disclose new avenues whereby UK and EU identities may meet, soon or later, again.

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Butterworth ( 2020 ).

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Zander and Kramp-Seidel ( 2023 ).

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Nicolini ( 2023 ), ….

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Nicolini, M., Fiorato, S. The Legal and the Literary: Cultural Perspectives on Brexit. Liverpool Law Rev 44 , 207–220 (2023). https://doi.org/10.1007/s10991-023-09330-0

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The impact of Brexit on UK trade and labour markets

Prepared by Katrin Forster-van Aerssen and Tajda Spital

Published as part of the  ECB Economic Bulletin, Issue 3/2023 .

1 Introduction

It has been almost two and a half years since the United Kingdom signed its post-Brexit trade deal with the European Union (EU), which was expected to have multifaceted impacts on the UK economy. The EU-UK Trade and Cooperation Agreement (TCA) was signed on 30 December 2020 and came into effect provisionally on 1 January 2021. Leaving the EU’s Single Market and the EU Customs Union represented a profound change in the economic relationship. This change was expected to have an impact on trade flows between the EU and the United Kingdom, but also on migration flows, foreign direct investment, regulation, the financial sector, science and education, and other areas of the UK economy.

While it will take some time for all the effects to emerge, this article focuses on recent developments in UK trade and labour markets, where the impacts of Brexit have been widely discussed. The coronavirus (COVID-19) pandemic is a confounding factor, but the available data allow a first stocktake of the effects of Brexit. While significant uncertainties regarding the precise magnitudes remain, the available evidence suggests that Brexit has been a drag on UK trade and has contributed to a fall in labour supply, both of which are likely to weigh on the United Kingdom’s long-run growth potential. [ 1 ]

2 Developments in UK trade flows since the implementation of the TCA

While the pandemic and supply chain disruptions have affected trade globally over recent years, Brexit had an additional impact on UK trade. The global recession and subsequent recovery in the wake of the pandemic, together with disruptions in global supply chains, have generally increased trade volatility globally over recent years. For the United Kingdom, the extensive and drawn-out negotiations on the withdrawal arrangements and on the future trading relationship generated even greater uncertainty, as also reflected in a sharp depreciation of the country’s exchange rate, which had already negatively affected investment, imports and exports during the period before the United Kingdom’s formal exit from the EU. [ 2 ] The United Kingdom’s investment growth rate was low long before Brexit, which also underlies the United Kingdom’s stagnating productivity growth. Following the Brexit referendum, a prolonged period of uncertainty about the EU-UK relationship further dampened investment. Exports have also been affected by the reduced attractiveness of the United Kingdom as an investment destination for foreign companies. [ 3 ]

Since January 2021, EU-UK trade has been governed by the EU-UK TCA, which formalised the trade and regulatory relations. The TCA ensures zero tariffs and zero quotas on goods traded between the EU and the United Kingdom. To qualify for tariff-free access, however, UK goods need to meet rule-of-origin requirements, which are set out in detailed annexes to the TCA. Thus, unlike in the Single Market, companies face additional administrative burdens and delays at the border owing to customs and regulatory checks. The United Kingdom and the EU have implemented the agreement at different speeds. While EU countries immediately applied full customs requirements and checks on imports from the United Kingdom, the United Kingdom delayed the introduction of full customs requirements on UK imports from the EU until January 2022, with additional health, safety and security checks delayed until the end of 2023.

UK goods trading volumes with the EU fell significantly after the implementation of the TCA, remaining below their pre-pandemic level until the beginning of 2022. On the import side, despite the delayed application of TCA provisions by the United Kingdom, there was a striking decline in UK imports from the EU over the first months of 2021, which contrasted with a rise in goods imports from non-EU countries (Chart 1, panels a and c). This could point to some substitution between EU and non-EU imports, with goods being redirected away from transits via EU countries. However, different cyclical conditions during the pandemic (owing to differences in case numbers and restrictions) and different exposures to global supply bottlenecks may also have played a major role. As the gap between imports from EU and non-EU partners has closed over recent months, the impact of all these factors appears to have been rather short-lived. [ 4 ] On the export side, UK exports to EU countries fell sharply immediately after the introduction of the TCA, as many exporters were struggling to meet the new paperwork requirements for documenting compliance with EU standards (Chart 1, panel b). Subsequently, UK goods exports to the EU recovered somewhat and have since moved broadly in line with exports to non-EU partners, although they remain relatively subdued compared with pre-Brexit trends (chart 1, panel d). Brexit thus remains a major factor. According to a recent survey by the British Chambers of Commerce of more than 1,100 businesses to mark two years since the TCA was signed, 77% of firms trading with the EU said the deal was not helping them to increase sales or grow their business. More than half of the firms reported difficulties in adapting to the new rules for exporting goods (45% for services). [ 5 ]

UK trade in goods with EU and non-EU countries

Source: ONS. Notes: The post-transition period started in January 2021, when the TCA entered into force provisionally. The latest observations are for January 2023.

Services trade with the EU has remained somewhat weaker than trade with non-EU partners. Most of the initially stronger decline in services trade with the EU appeared to be pandemic-related, particularly given the higher share of the travel and transportation sectors in EU trade than in non-EU trade and the travel restrictions during the pandemic (Chart 2). Together with the recovery in tourism, UK services trade has bounced back, well exceeding pre-pandemic levels. This also reflects the post-pandemic increase in travel prices. Other important categories of services exports to the EU, such as financial services, fell further than, or failed to grow as much as, exports to the rest of the world until the end of 2021 and have remained below their pre-pandemic levels. Brexit thus appears to have played some role, possibly also owing to the lack of agreements covering trade in services. In the area of financial services, which account for around 20% of total UK services exports, the TCA’s provisions were limited. The United Kingdom and EU had agreed that, alongside the TCA, they would conclude a Memorandum of Understanding on regulatory cooperation, but this has still not been signed. Since Brexit, the importance of the EU as a UK trading partner has declined, with the EU accounting for 29% of total UK financial services exports in 2022, compared with 37% in 2019.

UK trade in services and UK services exports for selected sectors

Source: ONS. Notes: The decomposition of services trade into exports to the EU and non-EU partners and imports from the EU and non-EU partners is only available in terms of values. The latest observations are for January 2023 for volumes and the fourth quarter of 2022 for services export values.

The UK current account deficit has widened since the implementation of the TCA, mostly driven by developments in the goods balance. In the first quarter of 2022, the UK current account deficit reached a record high of 7.7% of GDP, which was due to a worsening in both the trade deficit and the income balance (Chart 3). While most of the recent widening of the trade deficit could be attributed to high energy prices, the deterioration of the goods balance since the implementation of the TCA has generally been the main driver behind the developments in the UK current account. The services balance has remained fairly stable since the beginning of 2021, at around 6% of UK GDP, marking an end to the previously observed trend of rising surpluses in the UK services balance.

UK current account

a) Decomposition of the UK current account

(percentages of GDP)

b) Goods and services balances

Source: ONS. Note: The latest observations are for the fourth quarter of 2022.

The post-pandemic recovery in UK trade has lagged behind that of other advanced economies. While the United Kingdom saw a collapse in exports that was similar to other countries at the start of the pandemic, it benefited much less from the subsequent recovery in global trade (Chart 4). By the end of 2021, other advanced economies’ exports had rebounded almost to their pre-pandemic levels, while UK exports remained around 10% below that level. As a result, UK trade as a share of GDP fell by 11% between 2019 and the end of 2021 – a significantly stronger decline than that observed in the euro area or the United States. By the end of 2022, the gap between UK exports and those of other advanced countries appeared to have closed, which may indicate that the disturbances linked to the Brexit transition period are dissipating. However, this needs to be interpreted with caution. Temporary catch-up effects from the pandemic and recent changes in UK trade statistics may also account for this development.

Goods export volumes in advanced economies

(index: 2019=100, monthly data)

Source: CPB Netherlands Bureau for Economic Policy Analysis. Note: The latest observations are for January 2023.

3 Weakness in UK trade compared to other advanced economies: the role of Brexit

Two main approaches have been taken in the literature to isolate the impact of Brexit from pandemic-related effects. Various researchers have used a difference-in-difference approach, using different datasets and specifications. For example, Freeman et al., Du and Shepotylo, and Du et al. compare the evolution of UK-EU trade with UK trade with the rest of the world. Kren and Lawless, by contrast, use EU trade with the rest of the world as a comparison group. [ 6 ] Using high-frequency product-level data on trade in goods, a comprehensive set of product-time and product-partner fixed effects are applied to control for changes in trade patterns other than Brexit, in particular the changes in trade flows as a result of the COVID-19 pandemic. Following an alternative approach, Springford provided several updates of estimates of Brexit impacts using a “doppelgänger” method in which an algorithm selects countries whose economic performance closely matched that of the United Kingdom before Brexit. [ 7 ]

Taking into account the differences in methodologies, the available empirical evidence suggests that Brexit has reduced UK-EU trade in both directions. Table 1 provides an overview of recent results obtained using various approaches. Estimates of the decline in UK trade with the EU range from around 10% to 25%. [ 8 ] As the updates by Springford and Du et al. show, the results also depend on the time horizon being considered. As both UK and EU firms are still adjusting to the new environment, the gap between estimates may narrow again over time. Apart from providing estimates of Brexit effects since 2021, the available studies generally find no evidence of anticipation effects, i.e. a decline in UK-EU trade as a proportion of total UK trade prior to the provisional implementation of the TCA at the start of 2021. Across EU Member States, Brexit has led to a significant decline in trade with the United Kingdom in almost all cases, although at varying magnitudes. The decline has been most noticeable for those countries that historically accounted for a higher share of trade (i.e. trade in both directions with Ireland, exports to Cyprus and Malta, imports from Belgium and the Netherlands). [ 9 ] At the product level, it appears that there has been a substantial reduction in the number of products exported from the United Kingdom to the EU. The same is not found for exports of products from the EU to the United Kingdom. Overall, this is broadly consistent with the increased customs requirements on the EU side having a greater impact on low-value trade flows, often stopping such flows completely. At the same time, there has been an increasing concentration of export sales among fewer, larger exporters.

A selection of recent (i.e. post-Brexit) estimates of Brexit impacts on EU-UK goods trade

Source: Authors’ compilation.

A comparison of these results with those from analyses performed prior to Brexit suggests that the initial impacts following the TCA have been more severe than expected. Ahead of Brexit, many Brexit scenario simulations were performed with different types of models, assuming different levels of tariffs and non-tariff barriers. [ 10 ] For instance, based on a New Keynesian DSGE model, which assumes a free trade agreement scenario for goods trade with the euro area similar to the terms of the TCA, it was typically expected that Brexit would lead to a decrease in total UK exports and imports (in the long run) of roughly 3%, with minor effects on goods exports to the euro area but more sizeable declines in services exports to the euro area. [ 11 ] The available evidence so far suggests that the initial adverse impact on UK goods exports has been more sizeable, indicating that UK exporters, at least initially, have been struggling to meet the increased administrative requirements following the introduction of customs checks at the EU border. As developments in services appear to have been strongly driven by pandemic-related factors, further analyses would be needed to disentangle the impact of Brexit from the impact of the pandemic on this sector. [ 12 ]

4 Recent developments in the UK labour market

The UK labour market has become increasingly tight since the post-pandemic reopening, which also coincided with a fall in the number of EU migrants working in the United Kingdom. Following the post-pandemic recovery in demand in the second quarter of 2021, UK employers faced an unusually tight labour market, with a historically high number of vacancies and a low unemployment rate. Labour market tightness, measured as vacancies per unemployed person, has shown limited signs of easing, while companies have continued to struggle with recruitment difficulties (Chart 5, panel a).

Recent UK labour market developments

a) Labour market tightness and unemployment

(left-hand scale: percentages; right-hand scale: ratio of vacancies to unemployment, monthly data)

b) Labour demand and supply

(index: February 2020=100, monthly data)

Source: ONS. Notes: All series are shown as three-month moving averages. Labour market tightness is measured as vacancies per unemployed person. Data refer to UK population above 16 years old. The latest observations are for January 2023.

Weakness in labour supply has been the main driver of UK labour market tightness, while the surge in post-pandemic aggregate demand has played only a limited role. Many other advanced economies also experienced tight post-pandemic labour markets. In the same way as the initial collapse in aggregate demand at the start of the pandemic reduced recruitment of new workers, the reopening of the economy accelerated demand and encouraged companies to rehire staff. However, the persistence and the extent of labour market tightness make the United Kingdom an outlier, comparable only to the US economy. [ 13 ] One reason could be the sluggish recovery in UK labour supply, which has lagged behind other advanced economies (Chart 6). During the pandemic, many people became inactive, and, unlike the employment rate, the participation rate in the workforce has not reached pre-pandemic levels as the economy has recovered (Chart 5, panel b). A historical shock decomposition using a Bayesian vector autoregression (BVAR) analysis illustrates that the surge in UK post-pandemic labour market tightness can be attributed mainly to a smaller pool of available workers. While a faster than expected recovery was responsible for the initial rise in demand after the reopening of the economy, the analysis suggests that labour supply played a particularly important role. In contrast, aggregate supply constraints and labour mismatches appear to have been less significant (Chart 7). [ 14 ] The tightness of the UK labour market has therefore raised questions about the role of Brexit in UK labour shortages. The next section outlines the potential role of Brexit and changes in immigration policy in explaining these developments in labour supply.

Labour supply in advanced economies

(index: Q1 2020=100, quarterly data)

Sources: Organisation for Economic Co-operation and Development. Notes: Data for all countries refer to the active population between 15 and 64 years old that is either employed or actively seeking work. The latest observations are for the fourth quarter of 2022.

Labour market tightness, BVAR historical decomposition

(percentage deviation from the mean and percentage point contributions, monthly data)

Sources: ONS and ECB staff calculations. Notes: The chart shows the median posterior distribution of the historical decomposition of labour market tightness in deviation from its initial condition. Based on a BVAR estimation with sign restrictions, estimated using a monthly sample between January 2002 and January 2023. Structural shocks are identified using sign restrictions. In particular, aggregate demand shocks are identified by assuming that GDP and the consumer price index (CPI) move in the same direction, while aggregate supply shocks assume that they move in opposite directions. Labour supply shocks are assumed not to affect aggregate variables (GDP and CPI) on impact and to move tightness and wages in the same direction. Mismatch shocks affect wages and labour market tightness. Labour market tightness is measured in levels, while other variables are measured in month-on-month growth rates. The latest observations are for January 2023.

5 Weakness in UK labour supply: the role of Brexit

The Brexit referendum and the pandemic prompted a slowdown in EU employment growth as many EU workers found it less attractive to work in the United Kingdom. Prior to the 2016 referendum, successive EU enlargements had accelerated the movement of people between the United Kingdom and the rest of the EU. [ 15 ] The prospect of the Brexit referendum in June 2016 prompted a decline in EU net migration, as EU citizens found it less attractive to work in the United Kingdom. [ 16 ] The decline in new arrivals was accelerated by the onset of the pandemic in early 2020 and by the implementation of the TCA in January 2021. [ 17 ] The agreement introduced changes to UK immigration policy and ended automatic free movement for EU nationals not already settled in the United Kingdom. When looking at changes in the employment of EU citizens in the United Kingdom, it is evident that growth in such employment has slowed considerably since the Brexit referendum. A sharp fall at the onset of the pandemic was followed by a slow recovery in EU employment levels (Chart 8).

EU employment before and after the Brexit referendum

(index: Q2 2016=100, quarterly data)

Source: ONS. Notes: The chart shows employment of EU citizens in the United Kingdom before and after the Brexit referendum. The series is not seasonally adjusted. Data are shown on a quarterly basis and must be interpreted with some caution as they are based on Labour Force Survey responses weighted according to demographic trends from 2018 that pre-date the COVID-19 pandemic. “Trend 2004-2016” refers to the period between the first quarter of 2004 and the second quarter of 2016. “Trend 2016-2019” refers to the period between the third quarter of 2016 and the first quarter of 2020. The latest observation is for the fourth quarter of 2022.

The rise in UK vacancies and labour market tightness has been greatest in sectors that relied most heavily on EU workers, but this can also be attributed to a sharp recovery in demand in the sectors most affected by the pandemic. In the second half of 2021 there were many reports of UK labour shortages, ranging from lorry drivers to healthcare and hospitality workers. [ 18 ] At first glance, the sharp rises in vacancies appeared to be limited predominately to the occupations and sectors that relied most heavily on EU workers before the pandemic, as increased demand for labour potentially reflected the reduced supply of workers from the EU. These sectors also experienced a sharper increase in labour market tightness (Chart 9, panels a and b). This might imply a decline in matching efficiency in these industries, owing to an increase in skill and sectoral mismatches between those seeking work and available jobs. [ 19 ] The implications of Brexit were underlined by survey data, as, on average, 15% of UK companies cited lack of availability of EU workers as one of the reasons for their recruitment difficulties. This was particularly evident for sectors which had a high share of EU workers before the pandemic, such as accommodation and food services (Chart 10). [ 20 ] However, these sectors were also the ones most affected by the pandemic, since EU nationals were overrepresented in contact-intensive industries, which experienced the largest fall in employment during the lockdowns (Chart 9, panel c). Along with Brexit, the rapid recovery in post-pandemic consumer demand can therefore also explain a rapid surge in vacancies and labour market tightness, as firms in these sectors struggled to rehire previously laid-off staff. [ 21 ]

Labour market developments in sectors with traditionally high shares of EU workers

Source: ONS. Notes: The sectors that had the largest share of EU employees in 2015 were accommodation and food service activities (12.8%); manufacturing (10%); administrative and support service activities (9.8%); and transportation and storage (8.5%). “Other sectors” includes water supply, sewerage, waste management and remediation activities; construction; wholesale and retail trade, repair of vehicles; information and communication; financial and insurance activities; real estate activities; professional, scientific and technical activities; public administration and defence; education; human health and social work activities; and arts, entertainment and recreation. Some sectors are excluded owing to insufficient sample representation. Data for vacancies and tightness are shown as three-month moving averages. Data for unemployment are shown at quarterly frequency. The monthly series are not seasonally adjusted. The latest observations are for February 2023 for vacancies, January 2023 for labour market tightness and the fourth quarter of 2022 for employment.

Recruitment difficulties owing to reductions in EU applicants

(percentages of companies)

Source: Business Insights and Conditions Survey (ONS). Notes: The chart shows responses to the survey, which was performed at irregular intervals, in particular for sector-level data. The series display the share of businesses that reported difficulties recruiting employees and considered a reduced number of EU applicants to be one of the major factors. The latest observations are for 31 December 2022.

The slowdown in EU migration has to some extent been offset by an increase in non-EU migration. International migration was a key element in employment growth in most UK sectors before 2019. [ 22 ] Higher-skilled sectors recruited from both EU and non-EU countries, while lower-skilled sectors typically relied heavily on EU workers, given that lower-skilled workers from non-EU countries were generally not allowed to enter the UK labour market. [ 23 ] Following the Brexit referendum, the size of the EU migrant labour force began to shrink, while the share of non-EU employees was gradually increasing. The changes in total net migration indicate that by end of 2021, migration flows had returned to, or even surpassed, pre-pandemic levels. However, when only migrants seeking work are considered, the flows are much lower, albeit still relevant for labour market dynamics (Chart 11). [ 24 ] This raises the question of whether employers started to switch from EU to non-EU workers or whether the aggregate dynamics conceal asymmetries recorded at a sectoral level.

Net migration to the United Kingdom by nationality

a) Old data collection methodology

(thousands, annual data)

b) New data collection methodology

(thousands, quarterly data)

Source: Centre for International Migration (ONS). Notes: Panel a) displays annual data, while panel b) shows quarterly values since the second quarter of 2020. Each data point refers to year-end values in a particular quarter. Data on non-EU migration for work purposes in panel b) are approximated by ECB staff on the basis of the share of migration for work purposes in International Passenger Survey data. Such data are not available for EU migration under the new data collection methodology. In 2020 and 2021, study (45%) was the main reason for non-EU migration, while work (26%) and other reasons (29%) each accounted for a similar share. The latest available data show that other reasons accounted for a larger share (39%), probably reflecting an increased inflow of people arriving for humanitarian protection. The old estimates are produced using different methods from the new estimates, implying that comparisons between the two panels should be avoided. It should also be noted that the new estimates are experimental and provisional. These estimates are based on administrative and survey data from different sources, supported by statistical modelling where the data are incomplete. The latest observations are for the second quarter of 2022.

While on average the rise in non-EU arrivals has more than offset the fall in EU migration, the new migration policy has reduced labour supply in some sectors. The new migration rules had a particularly negative impact on labour supply in lower-skilled sectors. The reversal in migration flows could be explained by the new immigration system that liberalised access to the UK labour market for skilled non-EU citizens, while requiring visas for EU nationals who had previously faced no restrictions. Work permits have become attainable only for those above a certain skill and salary level. [ 25 ] This made most lower-skilled industries, which had previously relied predominantly on EU workers, ineligible to issue work visas, and prompted an increase in non-EU migration, easing shortages in some sectors and occupations (Chart 12, panel a). Sectors driving the surge in employment of non-EU citizens were, in most cases, not the same as those driving the decline in employment of EU citizens. As new visa conditions made hiring of lower-skilled EU workers more difficult, the absence of these workers became particularly apparent in sectors such as accommodation and food services (Chart 10). Firms in the hospitality industry were thus initially not able to replace workers from the EU, although the industry has observed an increase in non-EU employment over the past year (Chart 12, panel b). [ 26 ] In contrast, some other industries, such as health and social work, have not been negatively affected by the new migration rules or have even benefited from the inflow of skilled non-EU workers (Chart 12, panel c). [ 27 ] While on average the rise in non-EU employment has offset the fall in EU employment, the new migration policy has reduced labour supply in some sectors. [ 28 ] Nevertheless, the evidence available so far suggests that changes in migration flows are only one of multiple factors contributing to an increase in labour market tightness.

UK employment by nationality

(change since December 2019, thousands, monthly data)

Source: HM Revenue and Customs. Notes: The data are not seasonally adjusted and are shown as three-month moving averages. They include only payroll employment under the Pay As You Earn system and do not include other sources of employment, such as self-employment. However, the data do include individuals who were furloughed as part of the Coronavirus Job Retention Scheme. It should also be noted that these estimates are experimental and provisional. Changes in net UK employment are excluded to highlight the changes in employment of non-UK citizens. The accommodation and food sector represents 8% of total UK employment, while the health and social work sector accounts for 14%. The latest observations are for December 2022.

Brexit can only partially explain the weakness in the UK labour supply recovery, while an ageing population and pandemic effects appear to play an important role in explaining the decline in UK labour force participation. Changes in EU migration are not the only factor behind the recent changes in UK labour supply. Labour force growth had already started to decrease before the pandemic, as the United Kingdom’s “baby boomer” generation began to retire (as also observed in many other advanced economies), resulting in a marked shrinkage in the UK-born working-age population. Population ageing was countered to a certain extent by raising both male and female pension ages and through higher educational attainment, but the impact of these measures had largely dissipated by the onset of the pandemic. [ 29 ] Higher inactivity rates among those aged over 50 has contributed considerably to the increase in the inactive population (Chart 13, panel a). Other factors triggered by the pandemic have also contributed to the decline in labour participation. While the pandemic and prolonged waiting times for health services appear to have increased the number of people with long-term health issues among the inactive population, this increase is thought to be predominantly linked to individuals who were already inactive before the pandemic. When looking at flows out of the labour force, early retirement accounts for a much larger share (Chart 13, panel b). [ 30 ]

Other factors driving an increase in labour market inactivity

a) Inactive population by age cohort

(change since February 2020, thousands, monthly data)

b) Reasons for flows into inactivity for people aged between 50 and 70 years

(change compared to average for 2016-2019, thousands, annual data)

Source: Longitudinal Labour Force Survey (ONS). Notes: Data in panel a) are shown as three-month moving averages. Although the UK retirement age is currently 66, the only data available are for everyone above the age of 65. Data in panel b) refer to the change in the number of economically inactive people aged 50 to 70 years grouped by the reason for inactivity compared to the average between 2016-2019. The latest observations are for January 2023 for panel a) and December 2021 for panel b).

6 Conclusions

Almost two and a half years after the United Kingdom’s exit from the EU’s Single Market and the EU Customs Union, there is increasing evidence that Brexit has had negative effects on UK trade and the UK labour market. On the trade side, after controlling for pandemic-related effects, Brexit appears to have caused a significant decline in EU-UK trade in both directions, which, however, may recover to some extent over time, once UK and EU firms have fully adjusted to the new environment. The share of trade in GDP terms has also declined and a number of small and medium-sized UK companies have withdrawn from external trade with the EU. Regarding the labour market, there is evidence that the end of free movement for EU citizens has also contributed to the recent surge in labour shortages, particularly in sectors with lower-skilled workers. However, there have also been other, and potentially more important, drivers of the decline in UK labour force participation. Considerable uncertainty remains regarding the long-run impacts, including the extent to which the slowdown in EU trade and EU migration could weigh on potential labour supply and future productivity.

For further discussion on the impact on potential growth, see “ Monetary Policy Report ”, Bank of England, February 2023.

See, for instance, Graziano, A.G., Handley, K. and Limão, N., “Brexit uncertainty and trade disintegration”, The Economic Journal , Vol. 131, No 635, April 2021, pp. 1150-1185. For a review of developments in UK import demand and the balance of payments since the referendum, see the article entitled “ Understanding post-referendum weakness in UK import demand and UK balance of payments risks for the euro area ”, Economic Bulletin , Issue 3, ECB, 2021. Instead of benefiting from the sharp depreciation of the pound sterling, exports also suffered, given the high uncertainty and firms’ anticipation of the need to decouple.

See Driffield, N. and Karoglou, M., “Brexit and Foreign Investment in the UK”, Journal of the Royal Statistical Society Series A: Statistics in Society , Vol. 182, No 2, October 2018, pp. 559-582.

This development, however, needs to be interpreted with some caution, as data on goods imports from the EU were inflated in the first half of 2022 by delayed customs declarations from the second half of 2021. More generally, when interpreting recent developments in UK trade, it is important to note that in January 2022 HM Revenue and Customs implemented a data collection change affecting data on imports from the EU into the United Kingdom. This followed a similar data collection change in January 2021 for data on exports of goods to the EU from the United Kingdom. The Office for National Statistics (ONS) applied adjustments to 2021 EU imports to compare import and export statistics on a like-for-like basis. The full time series for imports from the EU still contains a discontinuity from January 2021.

See “ The Trade and Cooperation Agreement: Two Years On – Proposals for Reform by UK Business ”, British Chambers of Commerce, 2022.

See Freeman, R., Manova, K., Prayer, T. and Sampson, T., “ UK trade in the wake of Brexit ”, Discussion Paper , No 1847, Centre for Economic Performance, April 2022; Du. J. and Shepotylo, O., “ TCA, Non-tariff Measures and UK Trade ”, ERC Research Paper , No 98, Enterprise Research Centre, June 2022; Du, J., Satoglu, E.B. and Shepotylo, O., “ Post-Brexit UK Trade: An Update ”, Insight Paper , Centre for Business Prosperity, Aston University, November 2022; and Kren, J. and Lawless, M., “ How has Brexit changed EU-UK trade flows? ”, ESRI Working Paper , No 735, Economic and Social Research Institute, October 2022.

See Springford, J., “ The cost of Brexit to June 2022 ”, Insight , Centre for European Reform, December 2022. For more details on the methodology, see Springford, J., “ What can we know about the cost of Brexit so far? ”, Centre for European Reform, June 2022.

Results from a preliminary internal analysis performed in the context of the EU-UK network using aggregate data also lie within this range.

See Kren and Lawless, op. cit., Table 4.

For a summary of results of earlier analyses, see “ A review of economic analyses on the potential impact of Brexit ”, Occasional Paper Series , No 249, ECB, October 2020. Pre-Brexit studies were typically concerned with longer-run steady-state effects and most envisaged some stronger disruptions in advance of the referendum.

See Pisani, M. and Vergara Caffarelli, F., “ What will Brexit mean for the British and euro-area economies? A model-based assessment of trade regimes ”, Temi di Discussione (Working Papers) , No 1163, Banca d’Italia, January 2018.

There has been no recent analysis of Brexit impacts on services trade. Du and Shepotylo studied the impacts of the 2016 Brexit referendum on services trade in the United Kingdom and Ireland for the period up to the second quarter of 2020, finding that Brexit was already having adverse impacts on UK services trade ahead of the end of the transition period. See Du, J. and Shepotylo, O., “ Feeding the Celtic Tiger – Brexit, Ireland and Services Trade ”, Research Paper , Aston Business School, May 2021.

See also Gomez-Salvador, R. and Soudan, M., “ The US labour market after the COVID-19 recession ”, Occasional Paper Series , No 298, ECB, July 2022.

We introduce a BVAR model for the UK labour market that features structural identification via sign restrictions. The model includes four variables: output, inflation, labour market tightness and wages. With this set of variables, we aim to identify four shocks: an aggregate demand shock, an aggregate supply shock, a labour supply shock and a mismatch shock. A positive demand shock represents an upward shift in the demand curve, which pushes up output and inflation. A positive aggregate supply shock reflects changes in productivity or potential capacity in the economy, increasing output and reducing inflation through lower marginal costs for firms. A positive labour supply shock refers to an exogenous increase in labour supply which increases the number of participants in the labour market, leading to an increase in the number of job seekers. This makes it easier for firms to fill vacancies, leading to a decrease in labour market tightness and wages and an increase in output. A positive mismatch shock refers to exogenous changes in the process of matching jobs and workers, shifting the job creation curve upward and increasing both labour market tightness and wages in the economy.

The rapid increase in the movement of people can be attributed to several factors, such as the United Kingdom’s decision to immediately welcome nationals from the new Member States in 2004, the flexibility of the UK labour market, the appeal of London and the English language, and the attractiveness of UK universities. See Sumption, M., Forde, C., Alberti, G. and Walsh, P.W., “ How is the End of Free Movement Affecting the Low-wage Labour Force in the UK? ”, Report , The Migration Observatory at the University of Oxford and ReWAGE, August 2022.

The discouragement of EU workers can mainly be explained by the political and legal uncertainty related to Brexit, but also by the declining value of the pound sterling and the relatively better economic performance of other EU economies.

The pandemic-related exit of EU citizens partially reflected their high share of employment in high-contact services sectors, which were prone to furloughs and layoffs. In addition, the United Kingdom performed comparatively badly in terms of health sector capacities during the first wave of the pandemic.

For instance, severe shortages of lorry drivers affected the supply of retail goods, food products and fuel at petrol stations and restricted the capacity of UK ports. Shortages of butchers and workers in the meat processing industry forced farms to cull thousands of animals. In addition, there have been instances of severe recruitment difficulties in hospitality, construction, agriculture, and business and professional services.

See also “ Monetary Policy Report ”, Bank of England, February 2023.

Other sectors with above-average values were: manufacturing; transport and storage; water supply, sewerage, waste management and remediation activities; real estate activities; and education. For results from the Business Insights and Conditions Survey, see “ Business insight and impact on the UK economy: 9 February 2023 ”, statistical bulletin , ONS, February 2023.

Changes in employment do not reflect the 11.7 million jobs furloughed under the Coronavirus Job Retention Scheme, which applied from 1 March 2020 to 30 September 2021.

Workers from outside the United Kingdom accounted for 70% of the increase in employment between 2004 and 2019. The contribution from EU employment was slightly above 35%.

Some exceptions for employer-sponsored long-term visas were allowed for shortage occupations and for young people under the age of 26, while unsponsored long-term visas were available for “Global Talent”, entrepreneurs and Commonwealth citizens. Some non-EU workers were also eligible for temporary work visas. See Sumption, M. and Strain-Fajth, Z., “ Work visas and migrant workers in the UK ”, Briefing , The Migration Observatory at the University of Oxford, September 2022.

While net migration was positive in 2022, the sharp increase in non-EU inflows also reflects other factors, such as people arriving for humanitarian protection (from Ukraine and Hong Kong) and a post-pandemic surge in international students.

The new migration system introduced in January 2021 allows prospective economic migrants to apply for either a “Skilled Worker visa”, if they already have a job offer above a certain salary and skill threshold, or a “Seasonal Worker visa”, which is intended for short assignments in the agricultural and food-production sectors. The loss of free movement has therefore been offset by the more liberal regime for skilled work visas, primarily benefiting non-EU workers.

Initially, the biggest declines in EU employment were in accommodation and food services and in administrative and support services. In both sectors, employers relied heavily on EU citizens before Brexit and have not resorted to the work visa system since the pandemic, because relatively few of the jobs concerned meet the skill and salary criteria for work visas and because these employers have little experience of using the visa system in the past. See Sumption, M., Forde, C., Alberti, G. and Walsh, P.W., “ How is the End of Free Movement Affecting the Low-wage Labour Force in the UK? ”, op. cit. In 2022 these sectors recorded an increase in non-EU employment, which could be attributed to inflows of non-EU workers through the Youth Mobility Scheme, humanitarian protection visas or as dependants to the main applicants. Their flexible work rights made them likely to seek employment in low-skilled occupations. See “ Migration Advisory Committee (MAC) annual report, 2022 ”, corporate report , Migration Advisory Committee, January 2023.

The increase in non-EU workers was driven primarily by the health sector, as the high share of roles eligible for skilled work visas helped with a switch from lower levels of EU migration towards non-EU recruitment. Health sector employers are also larger on average and have more experience of using visa schemes.

Analysis comparing pre-pandemic counterfactuals to the actual outturns points to a net loss of workers accounting for 1% of the labour force. See Portes, J. and Springford, J., “ The Impact of the Post-Brexit Migration System on the UK Labour Market ”, Discussion Paper Series , No 15883, IZA Institute of Labor Economics, January 2023.

See Saunders, M., “ Some reflections on Monetary Policy past, present and future ”, speech at the Resolution Foundation, 18 July 2022.

See Boileau, B. and Cribb, J., “ The rise in economic inactivity among people in their 50s and 60s ”, IFS Briefing Note , No BN345, Institute for Fiscal Studies, June 2022.

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