Assessing the Effects of Brexit

A majority of panellists thought that restrictions on UK-EU labour mobility since Brexit have materially worsened the UK’s economic outlook. Some 69 per cent of the panel either agreed or strongly agreed that labour restrictions have worsened the outlook. Several panellists recognised a downward shift in the average net fiscal contribution of migrants, though many emphasised trade frictions as a more significant economic drag.
Two thirds of the panel thought closer UK-EU economic integration should be a central priority of the UK government's growth strategy. Though several panellists thought it more important to address domestic issues unrelated to Brexit, particularly on the supply-side.
Reducing goods trade frictions was viewed as the most promising area for economic gains from closer UK-EU relations. Panellists cited the disproportionate impact of Brexit-related trade restrictions on goods relative to services as well as rising global protectionism. “Services market access” and “labour mobility” were also viewed as areas with some of the largest potential economic gains

Question 1: Restrictions on UK-EU labour mobility since Brexit have materially worsened the UK’s medium-term economic outlook, through lower potential output and/or a weaker fiscal position.

This question received thirty-six responses.

Roughly one-fifth of panellists selected “strongly agree” and around half chose “agree”. A further fifth of the panel opted for “neither agree nor disagree”. Three panellists (8 per cent of panel) selected “disagree” and two panellists voted “strongly disagree”.

Panellists who agreed that labour restrictions had materially worsened the UK outlook cited the changing composition of migrants and loss of human capital. Strongly agreeing with the statement in question, Matthias Doepke (LSE) commented: “Studies support this conclusion, from a worsened fiscal position due to lower tax revenues to lower economic growth. Recent research also suggests that EU migrants in particular had highly beneficial impacts on the UK fiscal position.”

Several panellists recognised the shift in migrant composition but argued that it was less important for the UK's medium-term outlook than trade frictions. Ugo Panizza (Geneva Graduate Institute) commented: “My understanding is that restrictions on UK-EU labour mobility work mainly through composition. Total net migration rose, driven by non-EU inflows, but the shift away from high-employment, net-fiscal-contributor EU workers weakened the per-migrant fiscal contribution and left persistent shortages in lower-skilled sectors. However, it seems that the negative impact on potential output to come more from trade than from labour mobility.” David Aikman (NIESR) said: “The clearest medium-term damage from Brexit runs through trade frictions rather than labour mobility – net migration has risen since 2019. But the shift from young, high-participation EU workers towards students, dependants and care visas lowers the average net fiscal contribution per migrant, while the loss of frictionless short-term mobility to plug shortages in hospitality, food, construction and social care is weighing on potential output at the margin.”

A few panellists highlighted the loss of talent and opportunity in both directions. Jagjit Chadha (University of Cambridge) argued: “Apart from the loss of trained and skilled European labour force in Britain, what is often missed in these debates are the opportunities lost by British people to work and learn in Europe and bring enhanced human capital back to the UK.” Ricardo Reis (LSE) argued: “Especially at a time of great technological change, the loss of dynamic young people from all over Europe that used to converge to UK urban centers is one of many reasons holding us back from catching up with the US.”

Panellists who disagreed or strongly disagreed with the statement emphasised the role of policies pursued since the Covid-19 pandemic and the role of well-designed immigration policy. Michael Wickens (University of York) commented: “Immigration numbers have not weakened UK output and have not weakened the UK fiscal position. Covid and Labour policies have weakened the economy and the fiscal position.” Nicholas Oulton (LSE) strongly disagreed with the statement and argued: “The gains, if any, would come from attracting EU workers to Britain with above average skill levels. But to do this there is no need to reinstate free movement of labour with the EU. High skill workers can be attracted to Britain with the right visa policies. Free movement of labour with the EU would mainly attract unskilled workers as we saw before. Likewise British workers who wish to work in Europe can do so today provided they have the necessary skills and qualifications. Again, free movement is not necessary and would entail additional costs such as subsidizing EU students at taxpayers' expense.”

Question 2a: The economic gains from closer UK-EU economic integration, short of rejoining the EU, are large enough that this should be a central priority for the UK government’s growth strategy.

This question received thirty-six responses.

Roughly one-third of panellists selected "strongly agree" and a further third chose "agree". Three panellists (8 per cent) selected "neither agree nor disagree", while a further three (8 per cent) chose "disagree". Four panellists (11 per cent) selected "strongly disagree". One panellist selected "Don't know".

Several panellists emphasised the need to address domestic issues unrelated to Brexit, particularly on the supply-side. Charles Bean (LSE), who agreed with the statement, commented: “The evidence post-Brexit suggests that the extra trading frictions and consequent reduction in effective market size have indeed materially discouraged trade and reduced GDP (see for instance Bloom et al., 2025). Improving access for both goods and services would therefore help to raise both GDP and GDP per capita. That said, there are other factors that are even more important for raising the UK's economic prospects, such as higher public investment, measures to encourage more private investment, and boosting the skills of the workforce.” Paul Mortimer-Lee (NIESR Fellow), who strongly disagreed with the statement, argued: “The UK’s problem is supply, not demand from an increasingly sclerotic trading block. The sooner we start addressing the fundamental problems, which encompass an incompetent state apparatus (look at infrastructure, look at the navy, look at NHS productivity) rather than looking for the European magic wand that will solve all problems, the more likely we are actually to get somewhere.”

A number of panellists also expressed scepticism over the terms of further integration with the EU. Jonathan Haskel (Imperial College London) commented: “I assume the EU will be reluctant to offer us a particularly advantageous deal. We have plenty of growth policy at home needing attention: public sector productivity, ongoing planning reform, AI etc. Let us concentrate limited bandwidth on that.”

Question 2b: If you agree, which areas are likely to offer the largest economic gains?

This question received twenty-five responses.

Two-fifths of the panel thought that addressing goods trade frictions between the UK and EU would offer the largest economic gains. Around a quarter selected services market access, while one-fifth chose labour mobility. Research and education links and energy and climate cooperation each received one vote. One panellist selected “Other”.

Panellists who emphasised goods trade frictions highlighted the disproportionate barriers to goods trade relative to services and rising global protectionism. Thomas Sampson (LSE) argued: “The TCA has increased barriers to UK-EU trade and reduced UK exports and imports (Freeman et al. 2025). Goods trade has been harder hit than services trade. Removing these barriers by rejoining the EU's single market and customs union would not only increase trade, but make the UK a more attractive destination for foreign investment. The boost to GDP per person from customs union and single market membership would certainly exceed 1% and probably be considerably higher. None of the other policies in the government's growth strategy are guaranteed to generate gains this large.” Robert Kollman (Université Libre de Bruxelles) commented: “Reducing EU-UK goods trade frictions seems a natural priority in the current protectionist global environment.”

Panellists who opted for services market access cited the UK’s competitive advantage in this sector. Andrea Ferrero (University of Oxford) commented: “As the UK is largely a service economy, better integration with the EU should favour sectors in which the UK holds a comparative advantage, which are largely concentrated in tradable services.”

To access the full panel responses, including the free text comments where respondents expanded on their answers, please download this MS Excel sheet.