Anticipation of Brexit has reduced business investment by about 11% over the course of the three years following the June 2016 referendum vote. In addition, UK productivity has declined by between 2% and 5% over the same period, according to economists at the Bank of England, the LSE, Stanford University and the University of Nottingham.
The researchers have determined that much of this decline in productivity derives from negative within-firm effects as companies commit several hours a week of management time to Brexit planning.
“We also find evidence for smaller negative between-firm effects as more productive, internationally exposed, firms have been more negatively impacted than less productive domestic firms,” the economists say.
Brexit is unusual in that it has generated persistent uncertainty, the report says. “Three years after the original vote, the UK had not left the EU, there was still no clarity on the eventual outcome and our survey results show that there was substantial unresolved uncertainty.”