Brexit has caused the UK to "continue to bleed": GDP has fallen by up to 8%, the central bank's chief economist has sounded the alarm of spiraling inflation.

On the occasion of the tenth anniversary of the Brexit referendum, Hugh Pill, chief economist of the Bank of England, issued a stern warning: the structural changes brought about by leaving the EU make the UK economy more susceptible to a "sustained self-reinforcing" spiral of prices, greatly increasing the difficulty of controlling inflation. The sudden resignation of Prime Minister Stamer and the power struggle within the Labour Party are adding new uncertainty to the already struggling UK-EU relations and economic growth. Economic "continual bleeding": GDP depreciation up to 8% Since the Brexit referendum on June 23, 2016, where the decision to leave the EU was made by a slim margin of 51.9% to 48.1%, the UK has embarked on a long road of economic adjustment. Over the past decade, although the immediate recession and housing market collapse predicted at the time of Brexit did not occur, there is now a considerable consensus in the economic community that Brexit has seriously weakened the UK's growth potential. An analysis earlier this month showed that Brexit has led to a loss of approximately 2% to 4% of the UK's Gross Domestic Product, which is consistent with official estimates. However, some studies are warning that Brexit could result in a 6% to 8% decline in GDP per capita. Michael Saunders, a senior adviser at the Oxford Economics and former Bank of England official, stated, "Brexit is a continuous drag on the economy... It drags down GDP relative to where it should have been, leading to reduced government revenue, necessitating tax increases and spending cuts." Even independent economist and Brexit supporter Julian Jessop had to admit that the "initial impact of Brexit is clearly negative," but he believes that the cost is "lower than people's previous concerns" and will "gradually diminish over time." Inflation becomes more sticky: Supply side suffers from structural damage Pill pointed out during an event in Tashkent, Uzbekistan, that the trade barriers and changes in the labor market resulting from Brexit, such as the end of free movement of EU workers, are key factors affecting inflation. "For example, the structural changes that Brexit has brought to our labor and commodity markets are still being studied and digested," Pill said at the event. "I personally believe that these changes have already made our economic structure more prone to sustained self-reinforcing momentum in terms of prices, leading to more persistent inflation." In recent years, due to a series of supply shocks, the Bank of England has been struggling to maintain inflation rates close to the 2% target level. While the central bank can control inflation by adjusting demand, the supply side of the economy is equally important for prices, and the Brexit decision may have caused damage to this side. Trade division: Goods exports suffer, services sector still strong The actual impact of Brexit on UK businesses is reflected in the sharp increase in administrative costs and cumbersome border checks. For instance, according to the head of the UK operations of the German Bosch Group, its subsidiary currently has to deal with up to 10,000 import transactions per year, compared to just 40 before Brexit, leading to the establishment of a separate department of nearly 12 people. Ben Fletcher, CEO of the UK Logistics Association, said, "Businesses have adapted, but it has made everything more complicated. Costs are rising, selling to our biggest market is becoming harder." Annual surveys conducted by the British Chambers of Commerce since 2021 consistently show that most businesses believe that the UK-EU trade agreement has not promoted sales growth. Data shows that since 2016, UK goods exports have significantly declined compared to other major economies, and the impact has extended beyond the EU market. Additionally, the promise of controlling immigration numbers made during the Brexit campaign has seen a surprising reversal. Data from the Migration Observatory at the University of Oxford shows that since the immigration system came into effect after Brexit in 2021, the annual net immigration to the UK has reached 550,000, far higher than the 250,000 in the 2010s. The net migration number is set to approach 950,000 in 2023, reaching a historical high. According to a YouGov poll released earlier this month, sixty percent of Britons consider Brexit a failure. However, the UK's position as a major exporter of services remains solid. The UK is the second-largest exporter of services globally, second only to the US, and also the largest net exporter of financial services in the world. According to data from the industry advocacy group TheCityUK, financial and related professional services accounted for 11% of the UK's economic output last year, providing 2.5 million jobs. The City of London has not lost its status as a financial center as some had predicted. Data from the professional services firm Ernst & Young shows that between 2015 and 2025, the UK attracted 949 foreign direct investment projects, surpassing the total of France and Germany. "I don't think we have seen any overall decline in the UK's position as a financial services center," said Andrew Pilgrim, a partner at Ernst & Young. "Overall, London and the UK are still undeniably the global financial center of this region." Political fog: Prime Minister resigns, reset of relations faces uncertainty Under the pressure of weak economic growth and public welfare burdens, political turmoil has followed. The continued political chaos caused by Brexit has led to multiple changes in prime ministers in the UK. Just this month, the current Labour Prime Minister Keir Starmer announced his resignation, with his likely successor being former Mayor of Greater Manchester Andy Burnham. The UK-EU summit, originally intended to revise the Brexit agreement, has been postponed, and how the new government will deal with EU relations remains uncertain. Although the possibility of rejoining the EU is almost non-existent in political reality, there are hopes from various quarters for strengthening UK-EU ties. Bank of England Governor Andrew Bailey has also spoken out multiple times about the economic consequences of Brexit, calling for a rebuilding of close ties with the EU. Sean McGuire, director of the Confederation of British Industry, stated that the global trade landscape has undergone huge changes, and facing the more unpredictable United States, the increasingly powerful China, and the rising India, "improving relations with UK's largest and closest trading partner is definitely a wise move."