The United Kingdom’s economy is about 6% smaller than it would have been a decade after the Brexit referendum, Goldman Sachs says in an analytical note prepared for the vote’s anniversary. For its calculations, the bank applied the “doppelgänger” method, creating a synthetic model of the British economy based on comparable countries. The analysts note that before 2016, growth in the kingdom was close to US levels but subsequently slowed to eurozone rates. Depending on model choice, the lost output is estimated at between 4% and 8%, a finding corroborated by other academic studies.
Goldman Sachs identifies three main channels through which Brexit has had a negative effect. First, goods trade volumes are 10–15% below potential, which reduced overall productivity and cut GDP by 2–4%. Second, investment stalled amid business uncertainty — it remains about 10% below comparable countries, subtracting another 2% from output. Third, migration patterns shifted: an annual inflow of more than 300,000 EU professionals turned into an outflow. Although immigration from countries outside Europe later rose, the shift created labor shortages in sectors traditionally dependent on European workers.
Nevertheless, Goldman Sachs believes the worst is behind the UK and that the trade decline is stabilizing. With changing public sentiment — now 52% of Britons favor rejoining the EU — the government is pursuing closer ties with Brussels. The bank forecasts underlying UK GDP growth will accelerate from 1.2% to 1.5% in the coming years. If London manages to reset relations with the EU and regain access to the single market or a customs union, growth could pick up further to 1.7%.
