How did Brexit impact the UK economy in the short and long term?

The impact of Brexit on the UK economy has been a topic of debate and speculation since the referendum in 2016. While the full extent of the impact remains to be seen, there have been notable effects in both the short and long term.

Short-term Impact:

Immediately after the referendum, the pound sterling dropped to its lowest level in 30 years, which increased the cost of imports and inflation. Moreover, many businesses delayed investment decisions due to uncertainty over the future trade relations. This led to a contraction in economic activity, with GDP growth slowing down to 1.4% in 2018.

Long-term Impact:

One of the main effects of Brexit is the UK's departure from the EU Single Market and Customs Union, which has resulted in new trade barriers with the EU. This has impacted UK's businesses as they have lost the easy access to EU's 450 million consumers, which could result in a decline in exports and investment.

Furthermore, the uncertainty surrounding Brexit has deterred foreign investments, as the UK's future trading relations with the EU and other countries remains uncertain. Many multinational companies have relocated their offices and factories from the UK to other EU countries to remain in the single market.

Conclusion:

The short-term impact of Brexit on the UK economy was mainly driven by uncertainty and a decrease in investment. The long-term impact is likely to be more significant, as the UK's departure from the EU Single Market and Customs Union could lead to a decline in exports, investment and economic growth.