{"id":565662,"date":"2025-11-12T14:21:13","date_gmt":"2025-11-12T14:21:13","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/565662\/"},"modified":"2025-11-12T14:21:13","modified_gmt":"2025-11-12T14:21:13","slug":"how-brexit-impact-on-business-investment-left-the-uk-lagging-behind-europe","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/565662\/","title":{"rendered":"How Brexit impact on business investment left the UK lagging behind Europe"},"content":{"rendered":"

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When Britain voted to leave the EU in 2016, opinions were sharply divided about what it would mean for the economy. Those who voted for Brexit had a firm belief that it would unleash a new era of growth and investment, free from the EU\u2019s constraints. Those who opposed Brexit predicted a bleak economic outlook. <\/p>\n

Now, almost 10 years on, the data supports the views of those who wanted to remain in the EU. <\/p>\n

A study by economists at Stanford University, the Bank of England, and the National Institute of Economic and Social Research estimates that UK business investment is 12 to 18 per cent lower than it would have been if Britain had stayed in the EU. Researchers used almost a decade of data since the referendum, combining simulations based on macro data with estimates derived from micro data collected through surveys. <\/p>\n

The chart above tracks how business investment has changed across advanced economies since 2012. While investment elsewhere continued to climb, the UK\u2019s line breaks away and flattens. By 2024, the red line representing the UK trails clearly below other countries. <\/p>\n

The story is not one of a dramatic crash, but of stagnation. After the referendum, UK business investment stopped growing, even as other major economies such as Germany reported steady gains. That gap has only widened over time.<\/p>\n

Today, the UK\u2019s productive capacity from factories and digital infrastructure to research facilities is smaller than it might have been.<\/p>\n

The road not taken<\/b><\/p>\n

The yellow \u201cUK synthetic\u201d line in the chart shows what might have happened if Britain\u2019s investment levels followed the same path as comparable economies and without Brexit. By 2024, that line is about 15 points above today’s level. Investment elsewhere rebounded quickly after the pandemic. In Britain, it barely moved.<\/p>\n

Before 2016, the UK\u2019s business investment was growing at about 6 per cent a year, one of the strongest rates among G7 states. After the vote, that growth collapsed to almost zero. The Bank of England\u2019s Decision Maker Panel found that companies that were heavily dependent on EU trade cut investment by 16 per cent, and the National Institute of Economic and Social Research estimates that UK business investment is 12 to 18 per cent lower than it would have been if Britain had <\/p>\n

Based on the UK\u2019s pre-referendum investment level of about \u00a3230 billion ($301.5 billion) a year, the cumulative loss by this year could be \u00a3275 billion or \u00a3400 billion. <\/p>\n

Even after the pandemic, as global investment recovered, UK companies stayed cautious. By early 2024, investment in other advanced economies was up by about 25 per cent compared with 2016 levels. In the UK, it had risen by just 4 per cent.<\/p>\n

What\u2019s driving the gap?<\/b><\/p>\n

The study points to four main reasons for this long-term decline:<\/p>\n