Five years have passed since the official exit of the UK from the EU. New signs of London’s slow turn towards broader cooperation with Europe have emerged. Some observers see the turn in British foreign policy as a gradual retreat from the Brexit dream. Post-Brexit economic problems are intensifying day by day. UK government officials insist that the coronavirus pandemic and the war in Ukraine are causing the country’s financial problems. However, analysts believe Brexit has inflicted a heavy blow on the island’s economy. This article examines the post-Brexit economic developments in the UK in recent years. It also discusses the Starmer government’s efforts to improve trade relations with the EU. In this regard, the reasons for the vulnerability of the UK economy will also be examined.
The UK: Relations with Europe are more important than relations with the US
On the sidelines of the International Monetary Fund and World Bank meetings in Washington, British Chancellor of the Exchequer Rachel Reeves made it clear that trade relations with Europe are probably more important than relations with the US. The comments and the UK government’s efforts to facilitate trade with Europe, join joint scientific projects, and discuss industrial standards confirm that the path to leaving the EU has not yielded the promised fruits.
The UK government is trying to redefine its transatlantic relations.
The UK government is trying to redefine its transatlantic relations and chart a new course in cooperation with the EU. Meanwhile, the country’s economic outlook has once again become extremely gloomy. In its latest report, the IMF predicted that the British economy would grow by just 1.1 per cent in 2025. The British economy has slowed significantly compared to previous forecasts. The decline in British economic growth indicates the fragility of the country’s economy in the face of global crises. These developments have revealed the post-Brexit economic problems and proven the futility of this agreement.
Post-Brexit economic problems for Britain
Post-Brexit economic problems have had serious consequences for Britain. Trade isolation, reduced productivity, and heavy dependence on global fluctuations again expose the high costs of leaving the EU. The International Monetary Fund has said that the UK’s inflation rate will remain above the BoE target, citing rising government borrowing costs and a jump in energy prices. The country’s inflation rate is forecast to reach 3.1% in 2026, significantly above the Bank of England’s 2% target and indicating that inflationary pressures will continue to weigh on the economy.
Global trade war to hit UK economy hard
The International Monetary Fund has said that the UK will be one of the countries hardest hit by the escalating trade war between the US and China. The crisis, which is threatening export markets and London’s economic outlook by reducing investment and driving up inflation, is threatening to collapse. New US tariffs on British goods, including cars and metals, have received widespread backlash from domestic manufacturers. There are fears that a wave of job cuts could hit key industries by the summer if a trade deal is not reached urgently. Rising borrowing costs, weakening household consumption, and the gradual return of inflationary pressures have also added to concerns. In such circumstances, the UK government’s hopes for the role of Brexit in opening up new economic horizons have not been realized.
Labour seeks closer relations between the UK and the EU.
After the post-Brexit economic problems became apparent, the Starmer government is trying to revive relations with the EU. The British Prime Minister has not openly discussed returning to the European Union. However, the series of actions taken by the Labour government in recent months shows that a move towards closer relations with Europe has begun. These actions have been particularly in energy, scientific research, university cooperation, and trading standards. Some moderate MPs have spoken openly about the need to re-establish a strategic relationship with Europe. These developments took place when public opinion changed. According to the latest polls, most British citizens believe that leaving the EU has not achieved tangible results. They think it is time to repair relations with the EU economic bloc.
The UK economy is highly dependent on global developments.
The UK economy, which relies on foreign trade for around 65% of its GDP, is highly vulnerable to global developments. Experts have warned that a trade war between the United States and China could have widespread adverse effects on the economies of third countries. The impact of the Sino-U.S. trade war is particularly severe on open and sensitive economies such as the United Kingdom. At the same time, global financial markets have also been volatile in response to the intensification of US protectionist policies. Previous government estimates show that a free trade agreement with the US would add only around 0.16% to UK GDP over the next 15 years. This small figure seems insignificant due to the country’s structural problems, weak productivity, and broader financial challenges.
The British economy is more vulnerable than ever.
The British economy has become more vulnerable in recent years under successive crises. Leaving the EU, the energy crisis after the Ukraine war, rising living costs, and structural weakness in productivity growth have continuously threatened the country. The US tariff war has added a new link to London’s economic problems. The US tariff war has intensified concerns about the future of industrial production and employment. The International Monetary Fund emphasized in its report that even with a limited reduction in US tariffs, the British economy will continue to face a dark and worrying outlook due to weak domestic consumption, continued inflationary pressures, rising borrowing costs, and a decline in private investment.
Decline in British public confidence in the British economy.
The results of a new survey in the UK show that public confidence in the country’s economy has decreased significantly. Many citizens have reduced their daily expenses and are worried about the possibility of aggravating the situation. KPMG’s findings show that nearly 43% of British consumers are cutting their daily spending to manage the economic crisis. 29% have also announced that they have postponed the purchase of expensive goods. More than a third of British consumers have also increased their savings to cope with the situation ahead. According to the report, the general perception of the future of the country’s economy has become extremely harmful. According to the KPMG survey, which was conducted with the participation of 3,000 people in the three months ending in February, 58% of respondents believe that the British economy is getting worse.
The ongoing crisis of the British economy as Brexit continues
The UK has faced structural economic challenges in recent years, some related to post-Brexit economic problems. Separation from the EU has caused serious problems in the supply chain, foreign investment, and the labour market. This situation, combined with high inflation, rising living costs, and government austerity policies, has contributed to a weakening of public confidence and an economic recession. The fact is that the British economy has been in its worst shape for half a century, according to statistics. Statistical data also shows Britain’s economic growth has lost £140 billion due to Brexit. Economists predict that this figure will reach £311 billion by 2035. The cost of living crisis and volatile inflation have caused widespread dissatisfaction in Britain.
