A popular narrative is that recent weak UK growth performance is the result of a Brexit-induced slowdown in productivity growth. But the evidence does not support this. The global financial crisis of 2007-2008 began the productivity slowdown and soaring energy prices likely worsened it over the last few years. Despite these factors, recent slow UK productivity growth has still been stronger than that in the major EU economies.
A popular narrative is that the UK’s weak growth performance in recent years is the result of Brexit. The story runs that the UK before Brexit used to consistently grow faster than the EU economies but that a Brexit-induced slump in productivity growth has led to a much worse relative growth performance.
There is some truth in this, inasmuch as over the 1996-2015 period, UK growth was on average about 0.6 percentage points per year faster than that in the eurozone, whereas in the 2016-2025 period the UK and the eurozone have grown at almost exactly the same pace on average, around 1.5% per year. But in all other respects, the popular narrative is inaccurate and misleading:
- The UK was not consistently faster growing than the EU in the decade before Brexit and was growing at the same pace just before the Brexit referendum
- UK labour productivity was not strong before the referendum. Trend productivity growth had in fact declined to very low levels, below the levels seen in other major EU countries
- It is hard to see any negative development in the trend rate of UK productivity growth either around the time of the referendum or in the immediate aftermath of the UK leaving the EU customs union and single market at the start of 2021
- Trend UK productivity growth does seem to have dipped since 2023 but has remained stronger than in the major EU economies which have performed even worse
- Sectoral trends in productivity growth do not fit with the idea that Brexit has hit productivity growth. The most Brexit-sensitive sector, manufacturing, has actually seen a relatively strong productivity performance
- Soaring energy prices, with industrial users now paying around twice as much for electricity as the EU median, are a much more plausible reason for very recent softer productivity growth than Brexit, both in terms of the timing of the effect and the scale of the shocks
UK growth performance before Brexit
It is not accurate to say that the UK was consistently faster-growing than the EU in the years before 2016. From 2006-2011, UK growth was on average 0.4 percentage points slower as the global financial crisis and a lengthy fiscal tightening took a considerable toll. There was a better period for UK growth relative to the eurozone from 2012-2015, as the eurozone suffered with its own financial crisis, but by 2015 – the year before the Brexit referendum – the UK and eurozone were already growing at the same pace (see Chart 1).
Source: ONS, Eurostat
In addition, relatively good UK growth in the years before the Brexit referendum wasn’t due to a strong productivity performance. In the Q4 2008- Q4 2015 period, labour productivity growth (output per hour) averaged only 0.3% per year. It was a very strong rise in hours worked of 1.2% per year that allowed the UK to grow at 1.5% per year. In the second half of this period, when UK output growth was around 2% per year, labour productivity was stagnant.
In the period after the Brexit referendum, from 2016-2025, productivity growth has actually improved versus 2008-15 but the growth of hours worked has dropped – it is fewer hours worked that have driven the UK’s growth slowdown in recent years, not weaker productivity growth (see Chart 2).
Source: ONS
UK labour productivity growth before and after Brexit
If we take a look at the long-run development of UK labour productivity growth since the early 1990s, it is very hard to discern any change in the trend either after the Brexit referendum in 2016 or after the UK left the EU customs union and single market at the start of 2021. There is a striking change in the trend after the global financial crisis. But recent productivity performance has been more or less in line with the weak trend visible from 2009-2019 (see Chart 3).
Source: ONS
If we instead compare recent productivity performance with a trend calculated from 2015-2019, we can see a slowdown – UK labour productivity in Q3 2025 was about 3% lower than the level implied by extrapolating the 2015-2019 trend. But similar, or even worse, productivity gaps exist for other major EU countries. Italy’s productivity is about 2.5% below the level implied by the extrapolated trend from 2015-2019 and Germany’s and France’s productivity is 5% lower. It seems incredibly unlikely, based on this, that the UK’s recent softer productivity growth can be due to Brexit (see Chart 4).
Source: Author’s calculations based on ONS and Eurostat data
A look at productivity growth trends in the UK and the major EU economies confirms that the popular narrative about a post-Brexit collapse in UK productivity growth is at variance with the actual data. The 7-year average of UK productivity growth was higher than in the EU economies in the 1990s and much of the 2000s but had converged to French/German levels by 2011 and then dropped below so that at the time of the Brexit referendum the UK’s trend productivity growth rate was lower than France, Germany or Italy. On the verge of the referendum, the UK was already a productivity growth laggard.
What followed was modest recovery in both absolute and relative terms in UK productivity growth that lasted until the end of 2022 – that is, some time after the UK left the EU customs union and single market. Subsequently, the UK productivity trend turned down again but as of late 2025, it remains slightly above that of Germany and much better than France or Italy (see Chart 5).
Source: ONS, Eurostat
Another difficulty for the popular narrative of a post-Brexit productivity slump is that the sectoral pattern of productivity growth does not fit.
The sector most exposed to Brexit problems ought to have been the manufacturing sector with its high trade orientation and supposed supply chain links to the EU. But productivity growth in manufacturing has not weakened. Indeed, UK manufacturing productivity is about 4% above the extrapolated trend of 2015-2019. The broader ‘market sector’ is also only slightly below trend. The real source of the UK’s recent weaker productivity growth has been the government services sector where the level of productivity has actually declined and is some 10% below the extrapolated 2015-2019 trend (see Chart 6). This cannot have anything to do with Brexit.
Source: Author’s calculations based on ONS data
Soaring energy prices – a more plausible candidate for economic damage than Brexit
Finally, we should again draw attention to another factor that could have damaged UK productivity – sky-high energy prices. We have noted previously that UK industrial electricity prices have soared in recent years to around double the median EU level, a massive cost burden for energy-intensive industries. This has triggered a process of deindustrialisation focused on heavy industries that is likely to have been more important than Brexit in harming UK exports.
It may also have been harmful to productivity. The worst-affected industries tend to have relatively high levels of output per worker – their shrinkage harms productivity through compositional effects. High energy prices may also lead to declines in capital utilisation and productivity. The OECD finds that a 5% rise in energy prices cuts productivity by around 0.4% a year later. In this context, it is notable that the dip in UK trend productivity growth visible since 2023 has coincided with a period where UK energy prices relative to the EU median rose dramatically (see Chart 7).
Overall, our analysis shows that the popular narrative about the UK’s relative growth performance declining in recent years thanks to Brexit-induced weakness in productivity growth is at variance with the empirical evidence. This reinforces our earlier work that showed that the claim by the economic establishment that Brexit would hit UK productivity via reduced economic openness was based on flimsy empirical foundations. The more the claims about Brexit’s negative impacts are compared with actual data, the weaker they appear.
