A Decade After Brexit: Wealth Managers Weigh the Economic Toll

Hetal Mehta, chief economist at St James’s Place, argues that the UK’s export share into the euro area has suffered a sustained decline since 2016. Despite the competitive potential of a weaker sterling, persistent inflationary pressures and high unit labor costs have hampered the recovery. Foreign direct investment, once a cornerstone of the UK economy, has also failed to regain its former momentum.

The Growth Gap

Data from the Office for Budget Responsibility suggests a 4 per cent reduction in GDP directly attributable to Brexit. Jon Cunliffe of JM Finn notes that post-pandemic growth remains near stagnation at 0.3 per cent, leaving the UK trailing its G7 peers. This lack of real growth is echoed by Anna Murdock, who highlights that while asset owners have benefited from rising equity and housing markets, the average household has seen real wages stagnate under the pressure of fiscal drag and higher borrowing costs.

For investors, the primary takeaway remains the high cost of political volatility. Isabel Albarran of TrinityBridge observes that the UK’s share of the global equity index has halved over the last decade as international investors sought to avoid the complexity of British political wrangling. Yet, market turmoil has historically provided openings; the initial post-referendum drop in sterling created value in UK equities with high overseas earnings. As new leadership takes hold, analysts remain cautious: Mehta currently assigns a 40 per cent probability of recession to the UK, favoring a shift away from high-valuation US assets toward more attractively priced markets in the UK and Japan.