Brexit will impoverish the country over the next decade, with workers set to lose around £500 in wages every year, research shows.
The Resolution Foundation think tank and academics from the London School of Economics have said the average worker in Britain is now on course to suffer more than £470 in lost wages every year by 2030 after the taking into account the rise in the cost of living, compared to a remaining vote. in 2016.
“A less open Britain should be poorer and less productive,” the report says.
Read more: Brexit has cost the UK economy billions in trade and investment losses
Output in the UK fishing industry is set to fall by 30% and some workers will face “painful adjustments” over the next decade, the Resolution Foundation has said.
One of the hardest hit sectors of the UK economy will be electrical equipment manufacturing, which is particularly dependent on cross-border supply chains. In contrast, food manufacturing is expected to grow post-Brexit as it supplies the UK market.
Regionally, the North East is expected to be hardest hit by Brexit – with its businesses particularly dependent on exports to the EU – while the East of England (which has a high share of the food industry ) and Scotland are expected to outperform the rest of the country.
The report found that the immediate impact of the Brexit referendum result was clear, with rising inflation due to depreciation raising the cost of living for households and falling business investment.
However, the trading structure did not react before the introduction of the ACT in January 2021, with the overlap of the COVID-19 pandemic making it more difficult to assess its initial impact.
The Foundation said the UK did not experience a large relative decline in its exports to the EU as many had predicted, although UK imports from the EU fell faster than those from the rest of the world.
Britain has seen a sharp decline in trade openness (total trade as a percentage of GDP) since 2019 – a fall of 8 percentage points. France, which has a similar trade profile to the UK, saw a much smaller decline of 2 percentage points over the same period.
The UK has also lost market share in three of its biggest non-EU goods import markets in 2021: the US, Canada and Japan.
Watch: EU refuses to rule out suspension of Brexit trade deal
“The full effect of the TCA will take years to be felt, but this move towards a more closed economy will make the UK less competitive, reducing productivity and real wages,” he said.
“Research estimates that labor productivity will be reduced by 1.3% by the end of the decade by changes in trade rules alone. This will contribute to lower wage growth, with real wages pegged at 470 £ per worker less each year, on average, than it otherwise would have been.
Read more: UK braces for more economic gloom amid rising inflation and falling investment
Sophie Hale, senior economist at the Resolution Foundation, said: “Brexit represents the biggest change in Britain’s economic relationship with the rest of the world in half a century. This led many to predict that it would lead to a particularly big drop in exports to the EU and fundamentally reshape the UK economy towards more manufacturing.
“The first of these did not happen, and the second seems unlikely to. Instead, Brexit had a more diffuse impact by reducing the UK’s competitiveness and openness to trade. with a wider range of countries.