ECONOMIC AND POLITICAL ANALYSIS

OF THE UNITED KINGDOM SINCE

BREXIT

Carlos Vallejo Maroto

It has been six years since the Brexit referendum was held and the exit process started, being
this six years a constantly changing period worldwide, due to some historical events as a
medical crisis which affected the whole world as a result from the COVID-19 pandemic, or the
start of an Ukranian-Russian war which threatens to lead to a WWIII. If we reduce our focus to
the United Kingdom we could see five different Prime Ministers, many ups and downs in the
Brexit negotiations, the exit from the European Union and the death of one of the most
important monarchs in British history, Elizabeth II.

The starting point for our analysis will be the 2016 United Kingdom European Union
membership referendum, which took place on 23 June 2016. It was held under the mandate of
David Cameron, Prime Minister and Leader of the Conservative Party, and resulted in a 51,9%
in favor of leaving the European Union. This result had direct influence over diverse economic
aspects such as inflation, which was around 0,5% before the referendum and reached 1,6% the
following months, or the value of the British pound against the Euro, which had an inmediate
downfall of 5,82% the day after the referendum. At that moment, British economy was the 5th
economy in the world, having a GDP of 2.434.119 million Euro (1,7% growth against 2015). Its
GDP per capita was 37.080 Euro, locating on the 22nd place worldwide, althought it decreased
slightly against the previous year. During David Cameron’s mandate, unemployment decreased
considerably, going from a 7,8% in 2010 to a 4,8% in 2016. Although the Prime Minister was
having a good mandate, Cameron resigned the day after knowing the decission of the British
voters of leaving the European Union.

Cameron dimission became effective on 13 July 2016, when Theresa May substituted him as
British Prime Minister, being the second woman who held that position. May was Interior
minister during the first part of Cameron’s mandate and was named Leader of the
Conservative Party, therefore became Prime Minister. May had a strong inmigration policy, as
well as a hard fight against Islamic terrorism and surveillance. That strong policy brought
controversial decissions such as the deportation of islamic extremist Abu Qatada or the
proposal of reducing in 100.000 the number of inmigrants each year. In economic terms,
unemployment rate decreased from 4,8% in 2016 to 3,8% in 2019, slowing its descent but
being considerably lower than the unemployment rate in the Euro Zone (7,6% in 2019) and the
European Union (6,4% in 2019). GDP also had an slightly increase, going from 2.434.119 million
Euro in 2019 to 2.526.615 million Euro in 2019, assuming an increase of 3,66% in this four-year
period. However, although GDP per capita also increased, United Kingdom went from being
the 22nd to the 24th in GDP per capita worldwide.
After knowing some relevant data, we can say that in economic terms, May did not have a
highly troubled mandate and satisfactorily fulfilled with her duty, although her mandate did
not stand out for being a great economic period for the United Kingdom. This change if we see
her mandate from a political view, as May was the Prime Minister who carried almost all
negotiations derived from 2016 referendum. May was a convinced supporter of leaving the
European Union, as well as the European Unique Market, so she formally launched the exit
procedure, fixing a two-year period to negotiate the exit, which was supposed to end 29
March 2019. On 31 March 2019, Brexit officially started with some obstacles from the
European Union such as residence permit for all citizens from the European Union who were
living there and thousands of millions Euro bills.

May resigned of her position on 24 May 2019, so elections were celebrated. The Conservative
Party won again with the highest percentage since 1979, now with Boris Johnson as its Leader,
becoming Prime Minister on 24 July 2019. Under Jonhson’s mandate, United Kingdom
managed to reach the agreement for the official exit of the European Union, closing the Brexit
chapter on 31 January 2020, when United Kingdom became considered a third state. Johnson
had to deal with COVID crisis, which affected worldwide. British GDP fell a 9,8% during COVID
crisis, being the sharpest economic fall in G7. Its unemployment rate increased to a 5,2%
during 2020, remaining considerably under the European Union average, which reached a 7%,
and countries like France, Belgium or Portugal. The recover started in the first trimester of
2021, which showed a 6,8% growth rate and a 1% decrease in the unemployment rate,
previewing reaching a full recover in the second semester of 2022. British debt had a huge
increase in order to palliate the effects from the COVID crisis, showing an increase of 11,59%,
reaching a debt of 2.480.377 million Euro, surpassing British GDP of 2020 (102,61% of the
GDP). This debt was mainly compound of issuance of British treasury bonds, debt with other
government agencies and debt with the European Union. British debt continued to grow in
2021, although it decreased to a 95,35% of the GDP, being 2.568.034 million Euro. It results in
38.823 Euro per person, which results in British inhabitants being ones of the most indebted in
the world. Inflation also crashed the whole world during 2021 and 2022; in the United
Kingdom, the last update has stated that United Kingdom is having a 11,1% increase in the
inflation rate, resulting in a 9,6% during this whole 2022. It means a huge increase against the
inflation rate of 2021, which was 5,4%, and of 2020, with a 0,5%. It is not Johnson’s
government fault, as if we see inflation rate worlwide we can see over 9% in Europe, 6,9% in
the United States or 5,7% in South Korea.
Johnson`s government was hardly criticized as British press revealed that some parties were
held by the Prime Minister during COVID lockdown. After a non-successful motion of censure
and some other troubles with members of his party, Johnson resigned of his position on 7 July
2022, with Liz Truss occupying his position. Truss only stayed as Prime Minister for 44 days,
until she resigned.

Rishi Sunak became the Leader of the Conservative and Unionist party, therefore he also
became Prime Minister on 25 October 2022. We have not seen almost anything of his policy,
but he has promised an increase in the public spending, as well as reductions in waste of
money, so we will see how he manage it. Sunak has also emphasized about the economic and
financial stability. At a first view, we can say that he is fulfilling his words, as value of treasury
bonds had an increase after Sunak became Prime Minster.

At November 2022, United Kingdom is the 6th economy in the world, although its growth has
slowed since Brexit referendum, although its inflation and debt are a problem to considerate.
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