The 50p in Your Pocket: A Brexit Coin Worth Over £10k?

The 50p coin in your pocket could be worth more than £10,000 in the long run, but not for the reasons you might think. This potential windfall is not due to any sudden increase in the value of the coin itself, but rather the economic consequences of Brexit. As the UK navigates its new relationship with the EU, the impact on trade, investment, and productivity has raised concerns about the country's long-term growth prospects.

The Office for Budget Responsibility (OBR) has estimated that the UK's 'trade intensity' (trade as a proportion of GDP) has fallen significantly since the EU-UK Trade and Cooperation Agreement (TCA) came into effect in January 2021. This decline is more pronounced than in other advanced economies, suggesting that Brexit has had a negative impact on the UK's trade performance (OBR, 2023).



The UK's trade flows with the EU have also been affected. Since the TCA implementation, UK goods trading volumes with the EU have fallen significantly and remained below their pre-pandemic level until the beginning of 2022 (ECB Economic Bulletin, Issue 3/2023). This indicates that Brexit has had a substantial impact on UK-EU trade flows, with exports and imports to and from the EU declining compared to pre-Brexit trends.

The prolonged period of uncertainty about the EU-UK relationship following the Brexit referendum further dampened investment, contributing to the UK's productivity growth lagging behind other advanced economies (ECB Economic Bulletin, Issue 3/2023). The UK's investment growth rate was low long before Brexit, which also underlies the UK's stagnating productivity growth.

Brexit is likely to have contributed to a fall in labour supply in the UK, which is expected to weigh on the UK's long-run growth potential (ECB Economic Bulletin, Issue 3/2023). This can be attributed to reduced migration from the EU, as the UK's new post-Brexit migration regime has led to a decrease in net inward migration from the EU.

The UK's economic growth rates have been sluggish since the 2007-08 financial crisis, and this trend has continued post-Brexit. While it is difficult to disentangle the effects of Brexit from other factors such as the COVID-19 pandemic and the Russian invasion of Ukraine, the available evidence suggests that Brexit has been a drag on the UK's long-run growth potential.



In conclusion, the 50p coin in your pocket could be worth over £10,000 in the long run, but not due to any sudden increase in its value. Instead, the potential windfall is a result of the economic consequences of Brexit, which have raised concerns about the UK's long-term growth prospects. The UK's trade performance, productivity growth, labour supply, and economic growth have all been affected by Brexit, highlighting the need for policymakers to address these challenges and support the UK's economic recovery.