New Study Claims Brexit Economic Cost Nearly Double Official Estimates, Hitting UK GDP by 6-8%

New Research Highlights Deeper Brexit Economic Impact

A new working paper, 'The Economic Impact of Brexit', published by the National Bureau of Economic Research (NBER) in November 2025, indicates that the United Kingdom's departure from the European Union has caused almost twice as much damage to the UK economy as official estimates. The study, co-authored by a group of experts including senior Bank of England economist Philip Bunn, suggests that by 2025, Brexit has reduced the UK's Gross Domestic Product (GDP) per person by 6% to 8% over the past decade. This translates to an estimated economic hit of between £180 billion and £240 billion.

The findings contrast sharply with the Office for Budget Responsibility (OBR), the UK government's independent forecaster, which currently estimates the long-term economic damage from Brexit at 4% of GDP.

Methodology and Key Findings

The NBER paper's conclusions are drawn from an analysis spanning almost a decade since the 2016 referendum. The researchers employed a methodology that combines simulations based on macro data with estimates derived from micro data collected through their Decision Maker Panel survey.

The study identifies several channels through which Brexit has negatively impacted the UK economy, including:

• Elevated uncertainty
• Reduced demand
• Diverted management time
• Increased misallocation of resources due to the protracted Brexit process

Specifically, the paper claims that Brexit has lowered productivity by 3% to 4% and investment by 12% to 18% since 2016, alongside a 3% to 4% reduction in employment. The economic impact, according to the study, accumulated gradually, with a GDP shortfall of 4-6% by 2021, deepening to the current 6-8% by 2025.

Official Reactions and Future Outlook

The research has been formally presented to the OBR. The findings emerge as Chancellor of the Exchequer Rachel Reeves prepares for an upcoming budget, where she is anticipated to attribute a damaging growth downgrade partly to Brexit. Speaking at the International Monetary Fund meetings last month, Reeves stated, 'The UK's productivity challenge has been compounded by the way in which the UK left the European Union.' Similarly, Bank of England Governor Andrew Bailey has also commented that Brexit is expected to 'drag on economic growth for the foreseeable future.'

The study underscores the ongoing debate surrounding the long-term economic consequences of the UK's decision to leave the European Union, providing a more pessimistic assessment than previous official projections.