Trump was a full-throated champion of Brexit in 2016, drawing explicit parallels between it and the political movement he was marshalling. He initially imposed lower tariffs on Britain than the EU, which some cast as a reward for Britain\u2019s decision to leave.<\/p>\n
Brexit\u2019s drag on the British economy is no longer much debated, though its effects have been at times hard to disentangle from subsequent shocks delivered by the coronavirus pandemic, the war in Ukraine and, now, Trump\u2019s tariffs.<\/p>\n
The government\u2019s Office of Budget Responsibility estimates that Britain\u2019s overall trade volume is about 15% lower than it would have been had it remained in the EU. Long-term productivity is 4% lower than it would have been because of trade barriers with Europe.<\/p>\n
Productivity was lagging even before Brexit, but the rupture with Europe compounded the problem by sowing uncertainty, which chilled private investment. The years between the referendum and Britain\u2019s formal departure at the end of January 2020 were paralysed by debate over the terms of its exit.<\/p>\n
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By the middle of 2022, investment in Britain was 11% lower than it would have been without Brexit, based on a model by John Springford, who used a basket of comparable economies to stand in for a non-Brexit Britain. Trade in goods was 7% lower and gross domestic product 5.5% lower, according to Springford, a fellow at the Center for European Reform, a think tank in London.<\/p>\n
Trump has kicked off even more volatility by imposing, redoubling and then pausing various tariffs. His actions, of course, affect dozens of countries, most drastically the US and China. Already, there are predictions of recession and a new bout of inflation.<\/p>\n
Brexit and its aftermath had multiple second-order effects, both economic and political. Truss\u2019 plan for debt-funded tax cuts, which were driven by a desire to jump-start Britain\u2019s torpid economy, instead triggered a sell-off of British government bonds as investors recoiled from her proposals.<\/p>\n
A similar sell-off of American bonds began recently, with far-reaching implications for the US. Rising bond yields put pressure on governments because it means they must pay more to borrow. Sell-offs are also destabilising because they signal deeper anxiety about a country\u2019s creditworthiness.<\/p>\n
Diminished influence<\/strong><\/p>\n In Britain\u2019s case, fears of a credit crisis forced Truss to shelve the tax cuts, and she soon lost her job. While that calmed the markets, it left a residue of doubt among investors about Britain. Mortgage rates remained elevated for months, reflecting what one analyst unkindly labelled a \u201cmoron premium.\u201d<\/p>\n This skittishness among investors has constrained Britain\u2019s chancellor of the Exchequer, Rachel Reeves, from taking bolder measures to recharge the economy. Prime Minister Keir Starmer recently ruled out relaxing the government\u2019s self-imposed fiscal constraints, citing the blowback to Truss\u2019 free market experiment.<\/p>\n \u201cI would argue that the reason we have such a small-c conservative chancellor is due to the experience we had with Truss,\u201d Malloch Brown said. \u201cIt is directly related to not wanting to prompt the Truss effect again.\u201d<\/p>\n Unlike Britain, the US still has the world\u2019s default currency in the dollar, and until early this month, Treasurys remained a haven for investors. But economists predict that both will be subjected to greater pressure under Trump.<\/p>\n \u201cConfidence has been shaken; the bond vigilantes are more alert,\u201d said Richard Portes, a professor of economics at London Business School. \u201cPeople are now much more sensitive to policy inconsistency and policy irresponsibility.\u201d<\/p>\n Brexit also diminished Britain\u2019s influence on the diplomatic stage, something it has only recently begun to recoup with Starmer\u2019s efforts to act as a bridge between Europe and the US.<\/p>\n Trump\u2019s retreat from America\u2019s role as a security umbrella for North Atlantic security alliance Nato has driven Britain closer to Europe. But Britons still wrestle with the legacy of Brexit. A defence pact with the EU, for instance, is being held up by France\u2019s demand that Britain make concessions on fishing rights \u2013 an old chestnut from Brexit negotiations.<\/p>\n Bitter politics<\/strong><\/p>\n The longest-lasting effect of Brexit, analysts say, may have been on politics. The years of bitter debate divided and radicalised the Conservative Party, which governed from 2010 to 2024 with a patchwork of policies on immigration and trade that reflected the unwieldy coalition behind Brexit.<\/p>\n Some Brexiteers pushed a vision of Britain as a low-tax, lightly regulated, free trading nation \u2013 Singapore-on-Thames, in their catchphrase. Others wanted a stronger state role in the economy to protect workers in the left-behind hinterland from open borders and the ravages of the global economy.<\/p>\n These contradictions resulted in policies that often seemed at odds with the message of Brexit. Britain, for example, experienced a record surge of net migration in the years after it left the EU. The difference was that more of these immigrants were from South Asia and Africa, and fewer from Central and Southern Europe.<\/p>\n Magic bullet myth<\/strong><\/p>\n Brexit\u2019s backers sold the project as a magic bullet that would solve the problems caused by a globalising economy \u2013 not unlike Trump\u2019s claims that tariffs would be a boon to the public purse and a remedy for the inequities of global trade. In neither case, experts said, does such a panacea exist.<\/p>\n \u201cThe truth is, Brexit did not correct any of the problems caused by deindustrialisation,\u201d said Tony Travers, a professor of politics at the London School of Economics. \u201cIf anything, Brexit made them worse.\u201d<\/p>\n Frustrations over the economy and immigration were among the reasons that voters swept out the Conservatives in favour of Starmer\u2019s Labour Party last year. But his government has kept grappling with these issues, as well as with the bruised aftermath of Britain\u2019s divorce from Europe.<\/p>\n Trump\u2019s MAGA coalition has some of the same ideological fault lines as the Brexiteers, pitting economic nationalists like Steve Bannon against globalists like Elon Musk. That has led analysts to wonder if post-Trump politics in the US will look a lot like post-Brexit politics in Britain.<\/p>\n \u201cBrexit caused profound damage to the Conservative Party,\u201d Travers said. \u201cIt has been rendered unelectable because it is riven by factions. Will the Republican Party be similarly factionalised after Trump? \u2014 \u00a92025 The New York Times Company<\/p>\n![\"\"](\"https:\/\/apicms.thestar.com.my\/uploads\/images\/2025\/04\/27\/3286057.jpg\")
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