Brexit's Decade-Long Cost: Impact on Supermarket and Holiday Wallets

A decade after the United Kingdom's decision to exit the European Union in 2016, the effects of Brexit on the country's economy and household finances have become increasingly evident. The departure has made life more expensive and complicated for UK citizens, driving up costs across various sectors, from supermarket shopping to European holidays.

According to researchers from the London School of Economics, trade barriers on food imports post-Brexit resulted in a 12% surge in food costs between 2019 and 2023, costing the average family an additional £400. Low-income households have been disproportionately affected by these price hikes, as they allocate a larger share of their income to food. Furthermore, traveling to Europe with pets has become more expensive than before Brexit. The EU pet passport, which previously cost around £110, has been replaced by animal health certificates (AHCs) that must be renewed for each trip and now average £230. Mobile roaming charges are another cost that has increased.

Economic analyses highlight the negative impact of Brexit on the UK economy. The Office for Budget Responsibility (OBR) estimates that Brexit will reduce the UK's long-run productivity and GDP by approximately 4% compared to remaining in the EU. Other serious estimates suggest that by 2025, the reduction in GDP could be between 6% and 8%. Trade figures support this trend, with goods trade underperforming pre-Brexit trends and comparable economies. Exports and imports are estimated to be 10-15% lower than they would have been without Brexit.

Business investment is another critical area negatively impacted by Brexit. Analysis from the Bank of England shows an 11% drop in business investment in the six years following the vote, indicating that the UK has lagged behind other advanced economies. Some research suggests that by 2025, business investment could be 12% to 18% lower. This situation has compounded the UK's pre-existing weakness in productivity performance since the Financial Crisis. It is noted that Brexit did not cause an immediate economic crisis but rather created a gradual and cumulative drag on trade, investment, and productivity.

The Brexit process also ushered in a period of significant political uncertainty. The change of multiple prime ministers over the past decade underscores the volatility in the country's political landscape. This political uncertainty is considered a key factor contributing to the magnitude of the economic impacts. The government is planning a new UK-EU food export agreement, expected to come into force in the summer of 2027, to alleviate food costs and increase product variety on supermarket shelves. This agreement aims to eliminate paperwork and physical checks for dairy, fish, cheese, eggs, and fresh red meat from the EU to the UK.

Analysts and market expectations suggest that the long-term effects of Brexit are still unfolding, and future trade agreements and policies will continue to shape this process. The loss of significant market access rights for services firms and the end of free movement have increased the cost of doing business with the UK's largest trading partner. In the coming period, it remains to be seen to what extent new trade agreements and domestic economic policies can offset the costs incurred by Brexit.