Brexit will exacerbate long-term challenges facing the UK economy

Leaving the EU represents the largest change in the UK’s relationship with the rest of the world in half a century. The impact won’t be a one-off event. Structural changes will take place over the long term, as capital and labour adjust to the new trading arrangements. Household incomes will decrease as a result of a weaker pound and lower investment and trade. But we should not expect changes to the UK’s overall services focus and export specialisation. Swati Dhingra, Emily Fry, Sophie Hale, and Ningyuan Jia write that understanding the scale and nature of this change, and the extent of progress so far, is crucial for policymakers looking to reset the country’s economic strategy.