Brexit 10 years on: What it means for UK businesses today 

The headline picture is stronger than many expected. GDP growth has averaged 1.4% a year since 2016, in line with the previous decade. Real wage growth has improved, and London remains a global hub for financial services, particularly derivatives and foreign exchange. The UK continues to lead Europe in start-ups, with a deep venture capital ecosystem and around 60 active unicorn companies. At the same time, ICT services exports to the EU have almost doubled, and the UK has taken a leading role in the energy transition, completing its coal phase-out in 2024.

Beneath the surface, structural weaknesses are more visible. The economy is estimated to be several percentage points smaller than it would have been without Brexit-related frictions. Business investment has slowed, productivity remains weak, and UK–EU goods trade has underperformed relative to expectations. Financial markets also reflect this shift, with sterling yet to fully recover and UK equities trading at a persistent discount. Meanwhile, regional convergence has failed to materialise, with many “Leave” areas falling further behind rather than catching up.

While the past decade is fixed, the next one is still open. The UK retains real advantages: a flexible labour market, world-class universities, strong business creation and deep capital markets. But unlocking this potential will depend not only on trade policy, but also on domestic reform: improving infrastructure and housing, reducing energy costs, strengthening fiscal credibility, and supporting workforce participation.

Brexit was the shock – what comes next will be defined by the choices made from here.

While much of the discussion around Brexit focuses on its economic costs, it's equally important to recognise where the UK has shown resilience and retained competitive strength. The post-Brexit picture for the UK economy has not been uniformly negative. In several areas, the UK has maintained global leadership or continued to perform strongly.

One of the most notable outcomes has been the stability of economic growth. Despite a decade marked by political uncertainty, a global pandemic and an energy crisis, UK GDP growth has averaged around 1.4% per year since 2016, matching the decade before.

While this does not signal strong acceleration, it highlights a key point: the UK economy proved resilient to major structural shocks. For businesses, this stability provides a degree of predictability and continuity, even as underlying pressures evolve.

The UK’s financial services sector has remained a cornerstone of its economy. London continues to rank among the world’s leading financial centres, maintaining a dominant role in global foreign exchange trading and derivatives markets.

The UK also remains the world’s second-largest exporter of financial services, with approximately 21% of global market share, while continuing to serve EU clients despite Brexit-related changes.

This resilience reflects the UK’s deep capital markets, regulatory expertise and global connectivity, which continue to position it as a key hub for international finance.

The UK has retained its position as Europe’s leading hub for venture capital and start-ups. Between 2020 and 2026, it attracted around USD 164bn (£124bn) in venture capital funding, more than any other European country. The UK’s lead has narrowed as France, Germany and Sweden have gained ground.

The UK is now home to around 60 active unicorn companies (privately-held startups valued at over USD 1bn or about £760mn), supported by a strong ecosystem of investors, talent and institutions.

This shows a critical strength in the UK economy: its ability to generate and attract high-growth companies, especially in sectors such as fintech, software and digital services. For businesses, it underlines the UK’s continued relevance as a centre for innovation and entrepreneurship.

Digital and knowledge-based services have been a clear area of post-Brexit strength. UK ICT (Information and Communication Technology) services exports to the EU have nearly doubled since 2016, demonstrating sustained competitiveness even as goods trade has faced new barriers.

While Brexit  introduced friction in physical trade, the UK has remained highly competitive in services exports, particularly those less dependent on regulatory alignment and border processes. For many businesses, this reinforces the importance of digital capabilities and services-led growth models.

The UK has also made significant progress in its energy transition. Since 2016, wind generation has increased by around 130%, helping to reduce reliance on fossil fuels.

This culminated in a major milestone: the UK phased out coal power entirely in 2024, becoming one of the first major economies to do so.

While energy costs remain a challenge, this transition positions the UK as a leader in clean energy and provides a foundation for future growth in low-carbon industries.

Overall, the UK’s post-Brexit strengths lie less in transformation and more in resilience and retained competitiveness. Financial services, venture capital, ICT services exports and clean energy all demonstrate that, despite structural headwinds, the UK continues to compete effectively on the global stage. 

While the UK economy has proved resilient, Brexit-related frictions have added to existing structural challenges that continue to weigh on business performance. These impacts are less visible in short-term growth figures but are increasingly evident in weaker investment, lower trade intensity and a higher market risk.

One of the clearest measures of Brexit’s impact is the gap between actual economic performance and where the UK might otherwise have been. Independent studies estimate that UK GDP would have been 2–4% larger without the political instability and trade frictions triggered by Brexit. For businesses, this implies a smaller overall market, weaker demand and fewer expansion opportunities than might otherwise have been available.

Brexit has fundamentally altered the UK’s trading relationship with its largest partner. The EU remains the UK’s largest trade partner, accounting for 37% of UK trade in 2025, and remains its largest goods export market. But new customs procedures, regulatory checks and non-tariff barriers have increased the cost and complexity of trade.

As a result:

• UK-EU goods trade is estimated to be around 21% lower than it would have been without Brexit
• Supply chains have shifted away from the EU toward partners such as China and the US
• New trade agreements have expanded market access but have not matched the scale or depth of pre-Brexit integration with the EU

For exporters, this results in ongoing compliance costs, administrative burden and reduced competitiveness, especially in manufacturing and goods-based industries.

Productivity remains one of the UK’s most persistent economic weaknesses. Productivity growth has been among the weakest in the developed world since the global financial crisis, and trend productivity growth has faltered since Brexit. While not all of this is caused by Brexit, lower business investment, slower capital accumulation, weaker trade openness and poor technology diffusion have all reinforced the challenge.

At the same time, the diffusion of new technologies from leading firms into the wider economy has been slow, further constraining efficiency gains. The result is an economy where output growth is increasingly driven by labour inputs rather than productivity improvements.

Business investment has been one of the clearest areas of weakness since the referendum. Business investment growth slowed compared with the previous decade, while estimates cited in the private-markets section suggest that overall UK investment was around 12–18% below a no-Brexit path by 2025.

This has long-term implications:

• Weaker capital formation reduces future productivity
• Firms delay expansion and innovation decisions 
• The UK risks falling behind peers in key growth sectors

For business leaders, this environment reinforces the need for careful capital allocation and long-term planning under uncertainty.

Financial markets have also reflected a structural shift in how the UK is perceived. Since the referendum, sterling has not fully recovered against the euro or dollar. UK assets also continue to trade at a discount compared to international peers, and equity markets have underperformed both US and European benchmarks.

This discount is partly driven by a higher perceived political and fiscal risk and reinforced by events such as the 2022 mini-budget crisis, which highlighted the importance of policy credibility.

For businesses, this can translate into a higher cost of capital, increased sensitivity to policy decisions, and greater volatility in financial conditions.

Overall, the UK’s post-Brexit challenges lie not in a single shock, but in persistent frictions and structural drags. Lower trade intensity, weaker investment and a higher risk premium are gradually reshaping the operating environment for UK businesses, making long-term competitiveness more challenging than before. 

Reducing regional inequality was a key talking point during and after the Brexit referendum. In practice, the post-Brexit picture for UK regions has been uneven, highlighting persistent structural divides rather than resolving them.

Reducing regional inequality, often framed as “levelling up”, was central to the Brexit narrative. The expectation was that regained policy control and redirected resources would help underperforming regions catch up.

The evidence so far suggests that convergence has generally failed to materialise. Across a sample of 332 areas in Great Britain, 59% of the population living in Leave-voting areas have seen their regions fall further behind the national income per capita average since 2016. Some Leave-voting cities, including Blackpool, Doncaster and Wolverhampton, have improved relative to the UK average, but the broader picture points to limited rebalancing.

Brexit has coincided with persistent regional divergence in economic outcomes. At the same time, sectors with high exposure to goods trade, manufacturing and energy costs have faced additional pressure from trade frictions, weak investment and elevated electricity costs. This suggests that Brexit-related frictions may have reinforced existing regional and sectoral vulnerabilities, rather than creating them from scratch.

Since Brexit, job creation has been concentrated among foreign-born workers. Foreign-born workers’ jobs are estimated to have grown by around 0.8% per year on average since 2016, contributing to more than 50% of UK GDP growth.

At the same time, structural challenges have emerged, including ageing domestic demographics, health-related workforce inactivity and uneven access to skills.

These labour-market pressures can be challenging for regions with weaker participation, poorer health outcomes or smaller skilled-labour pools, although these are part of the UK’s broader structural growth challenge rather than solely Brexit effects.

In this context, immigration, originally a central issue of the referendum, has become an important economic stabiliser, helping to sustain labour supply and overall economic growth. 

Overall, the post-Brexit regional picture has been less about convergence and more about persistent, and in some cases deepening, divergence. The challenge for the decade ahead will be turning that trajectory around, ensuring that growth is not only sustained, but more evenly distributed across the country.

Beyond the immediate impacts on trade and growth, the UK’s post-Brexit outlook is increasingly shaped by structural pressures that Brexit has brought into sharper focus. These go beyond short-term cycles and are likely to define the operating environment for businesses over the coming decade, especially in costs, labour supply and investor confidence.

Energy has emerged as a key competitiveness challenge. While the UK has made rapid progress in renewable generation, particularly wind, the transition has exposed grid constraints and system costs. Leaving the EU’s Internal Electricity Market reduced trading efficiency and increased transaction costs, while domestic bottlenecks, including the uneven geographic distribution of renewable generation, have added further pressure. The post-Brexit shift in electricity trading arrangements added upward pressure on wholesale prices of 0.25–0.7%, or £90–250mn, in 2021.

The result is a structurally higher energy cost base compared to some European peers, alongside continued price volatility. Divergence between UK and EU carbon markets also risks adding further friction for energy-intensive industries, particularly as carbon border mechanisms come into force.

Labour supply has become a growing constraint on growth, and health outcomes are a key factor. NHS reform is recommended as an economic priority, noting that long waiting times delay the return of workers to employment, increase absenteeism and weaken productivity. This reduces effective labour supply at a time when demographics are already becoming less favourable.

The economic impact is fewer workers available to fill vacancies, weaker productivity and lower output potential. In tighter labour markets, businesses may also face additional wage pressure. Addressing NHS performance is therefore not just a public service issue, but a critical economic lever for restoring labour market capacity.

The UK’s fiscal framework has come under sharper scrutiny in the post-Brexit environment. The 2022 mini-budget crisis underscored how sensitive markets are to policy decisions, triggering volatility in gilt markets and forcing emergency intervention from the Bank of England.

Since then, a clear lesson has emerged: fiscal credibility is essential, and it cannot be taken for granted. The current framework based on rolling forecasts has been criticised as opaque and vulnerable to revision rather than genuine discipline.

At the same time, structural pressures on public finances are increasing, including rising pension costs, a need for higher defence spending, and investment requirements in infrastructure and energy. Balancing these demands while maintaining credibility will be central to the UK’s long-term economic outlook.

One of the most persistent post-Brexit market effects has been a shift in how investors price UK risk. UK assets now carry a structurally higher risk premium, reflected in weaker equity performance and more cautious investor sentiment relative to international peers.

This is not solely due to Brexit itself, but to the combination of trade frictions, policy uncertainty and fiscal pressures. Together, these have contributed to a perception of greater risk, which can translate into higher borrowing costs, lower valuations, and more volatile financial conditions. For businesses, this means operating in an environment where access to capital and cost of financing may be less favourable than in the past.

The long-term post-Brexit challenge to the UK economy is less about immediate disruption and more about persistent structural headwinds. Energy costs, labour supply constraints, fiscal pressures and a higher risk premium are all shaping a more challenging economic landscape. Successfully navigating these pressures will require sustained policy focus and strategic adaptation.

The post-Brexit outlook for UK business will depend less on revisiting the original decision to leave the EU and more on how the country responds in the years ahead. The next decade will be shaped by policy choices, investment priorities, and the ability to address long-standing domestic constraints.

The evidence from the past ten years points to where reform is needed: while Brexit exposed weaknesses, many of the UK’s challenges, such as low productivity, weak investment and regional inequality, were already embedded in the economy.

Addressing these issues will require a stronger focus on:

• Planning reform to accelerate housing and infrastructure development
• Innovation diffusion, ensuring new technologies spread beyond leading firms 
• Labour market participation through improvements in health outcomes
• Fiscal reform to create a more credible and transparent policy framework

The UK already has strong fundamentals: education, financial markets and business dynamism. However, these strengths need to be supported by a more effective domestic policy execution.

Investment will be central to improving the UK’s long-term growth outlook. Business investment has lagged in recent years, and public investment has been constrained by fiscal pressures, limiting progress in key areas.

Priority areas include:

• Energy infrastructure to reduce costs and improve supply resilience
• Grid development to support the expansion of renewables
• Housing and transport to improve labour mobility and productivity
• Industrial policy targeting sectors such as clean energy, defence, digital technologies and advanced manufacturing, and life sciences
  

Reintegrating more closely with European energy markets could also help reduce costs and improve efficiency. Without action, high electricity prices and infrastructure bottlenecks risk continuing to undermine industrial competitiveness.

Looking ahead, the UK’s competitiveness will depend on how effectively it manages the trade-offs and constraints brought into sharper focus by Brexit. On the positive side, the UK retains a globally competitive services sector, deep capital markets and strong financial services, and a flexible labour market and strong education system.

However, these strengths are being offset by higher trade friction with the EU, elevated energy costs, and a structurally higher risk premium in financial markets. This creates a more complex business environment, one where success will depend increasingly on adaptability, cost management and strategic positioning.

Overall, the future impact of Brexit on UK business is not predetermined. The UK has the capacity to strengthen its economic position, but doing so will require a shift in focus, from managing the consequences of Brexit to unlocking domestic growth drivers.

The next decade will be defined not by the Brexit decision itself, but by how the UK responds to the opportunities and constraints it has created.