A Sprawling Crisis in the UK: Twin hazards of Covid-19 and Brexit
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The great economic powers of the 21st century, based on GDP, are the United States, China, and the European Union. 

In recent decades, the UK has built its international influence on history and reputation, buttressed by our membership of the European Union and alliance with the United States. However, as the UK unplugs from its biggest trading partner after four decades, the twin hazards of Brexit and Covid-19 are colliding at an alarming rate. 

Covid-19 has left many in the UK bereaved and bereft. Billions of pounds have been diverted from economic growth to support people until the private sector returns to full capacity. This crisis, coupled with the economic damage of Brexit and the loss of our trading advantages as part of the single market and the customs union, leaves the UK in a weak economic position in comparison to international counterparts


Leaving the EU was an emotionally charged political proposition, a campaign which conflated sovereignty with power and was rooted in populism and post-imperial nostalgia. Brexit was never primarily framed as an economic question, but a question of taking back sovereignty from the EU. Leave supporters emphasized lost parliamentary sovereignty and Dominic Cummings’ notion of “taking back control”, rather than the economic advantages of being part of the EU trading bloc. When economics were mentioned, leaving the EU was always deemed a positive step. Boris Johnson’s false claim, which was plastered on the now infamous red campaign bus, that the £350 million per week the UK paid to the EU could instead be spent on the NHS, being an obvious example.

As such, when Boris Johnson claimed to have created a “giant free-trade zone” on Christmas Eve, it’s important to note that the new trade deal will leave Britain facing a 4 per cent loss of potential gross domestic product over 15 years compared with EU membership, according to the UK’s Office for Budget Responsibility. “The agreement provides for continued and sustainable air, road, rail and maritime connectivity, though market access falls below what the single market offers,” said the European Commission

In addition, the mass exodus of banks and other financial institutions that has been predicted since June 2016 is beginning to occur. Large multinational companies, including Dyson and Barclays, have moved their assets from the UK to low-tax jurisdictions. This is especially interesting as James Dyson lauded the UK’s potential after leaving the EU, only to move his company’s headquarters to Singapore. “The relocation of 7,000 high-paid finance jobs will inevitably hit the UK tax base,” said Omar Ali, EY’s head of financial services. “Even using a conservative estimate [..] the direct loss to the Exchequer from employment taxes will be around 600 million pounds.”

Any forecast of the future level of economic activity is subject to change and shaped by hard-to-predict macroeconomic events. However, trade barriers, decreased migration, and repealed or adapted business regulations are just some of the ways that Brexit will have a detrimental impact on the UK’s economy moving forward.


The economic impact of the Covid-19 pandemic has hit the UK particularly hard in comparison to international counterparts. The UK economy is still 9.7% below its pre-pandemic levels, more than double the decline seen in the US and the EU respectively. 

The UK now faces a new variant of COVID-19, which is up to 70% more transmissible. The new variant of COVID-19 has accelerated the spread of the disease, increasing the pressure on the NHS and intensifying the restrictions that millions of us are living under. 

England’s third national lockdown has legally come into force, and economists believe the restrictions are almost certain to lead to a steep double-dip recession in the UK economy

The government is offering businesses additional support to try to stave off long-term economic damage. Chancellor Rishi Sunak has announced £4.6 billion in new grants to support retail, hospitality and leisure firms, and another £594 million for struggling firms in other sectors. However, with the economic fallout being bigger than the second lockdown, analysts believe this will weaken further the British pound in relation to the dollar and euro. 

The Union 

Brexit divided England and Wales from Scotland and Northern Ireland. It divided political parties; business and trade unions; friends and generations. One deeply troubling economic impact of Brexit is the risk of breaking up the UK by increased support for Scottish independence and Irish reunification. Since 1st June, all polls have shown Scottish independence ahead, on average by 7%.

Moreover, the Welsh independence group YesCymru saw huge growth in the second half of 2020. Support for Welsh independence has risen from 10% in 2012, to 23% today, which is where support for Scottish independence was when the IndyRef was called in 2014. 

At its heart, economic union is about free trade – the movement of goods and services, people and capital resources – without hindrance. We take for granted a Union in which there is freedom of movement, and in which business can secure capital to expand from any financial institution, regardless of the border. 

The twin economic impacts of Covid-19 and Brexit, however, are likely to increase regional disparities. The North West, London, South East, Wales and the West Midlands will be among the worst affected by both Brexit and Covid-19

There is no set date for independence referendums for Scotland, Northern Ireland or Wales. But when (or if) they do, the twin hazards of Brexit and Covid-19 will have played a clear part in the dismantling of the United Kingdom. 

A Decisive Year 

Future historians may well pick 2019 as a decisive year in the decline of the UK as an economic world power. This comes a century after the Treaty of Versailles, in 1919, when the UK was at the peak of its power in determining the fate of nations after the First World War. 

What’s more, Brexit-era policy has uncorked a populism that is difficult to constrain. Emotion overcame reality, fiction defeated fact, and the government gave itself the power to break the law. If this is how we are going to conduct our public affairs, it will kill all respect in our system of government and lead to further inadequate economic decisions down the line.