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Brexit has imposed large and widespread economic costs across the UK, but the burden has fallen most heavily on initially prosperous, trade-integrated regions including London, the South East and Scotland, according to new analysis co-authored by Professor Thiemo Fetzer and published at .

The new study, Measuring the Regional Economic Cost of Brexit: Evidence as of 2026, estimates how Brexit affected output and nominal household income across UK local authorities, regions and constituent countries.

Using a synthetic control approach, the researchers compare each UK area鈥檚 actual economic path with a data-driven counterfactual: how that area might have evolved had Brexit not happened.

The research finds:

• Brexit has reduced UK economic performance substantially. Quarterly GDP estimates suggest a shortfall of around 3–5 percentage points by the end of the sample, while annual GVA estimates point to a UK-level gap of around 7–8%.
• The economic cost is widespread. Around 70% of local authority districts are estimated to be below their synthetic counterfactual, meaning most places performed worse than comparable non-Brexit trajectories.
• The burden is unevenly distributed. Losses are concentrated in initially prosperous, trade-integrated areas, especially London, the South East and Scotland.
• Brexit appears to have 鈥渓evelled down鈥� the UK. Regional gaps may have narrowed not because poorer regions caught up, but because richer and more internationally integrated regions were pulled down.
• Northern Ireland is the major exception. Its estimated gaps are near-zero or positive, consistent with its distinctive post-Brexit trading position and continued partial integration with the EU single market.
• Production losses and household-income losses do not always align. These gaps, measured by GVA and GDHI (see below) diverge across places, showing that Brexit鈥檚 effects travel through commuting, income flows, ownership claims, taxes and transfers.
• The areas that voted most strongly for Brexit are not generally the areas that have borne the largest economic costs. The deepest losses are concentrated in many Remain-leaning, internationally exposed regions.

The analysis uses two complementary measures: real Gross Value Added (GVA), capturing where production takes place, and Gross Disposable Household Income (GDHI), capturing the income households can spend or save after taxes and transfers.

Professor Fetzer said:

"The research finds that Brexit has been a negative-sum shock for the UK economy. While the aggregate cost is large, the spatial distribution of that cost is politically revealing. Rather than delivering gains to left-behind places, Brexit appears to have damaged the UK鈥檚 strongest regional economies most severely.

"The result is a form of 鈥渓evelling up by levelling down鈥�: regional inequality may be compressed, but through decline at the top rather than improvement at the bottom. This reduces the ability to redistribute tax revenues from the south into the rest of the United Kingdom.

"The study also shows why a single national estimate misses much of the story. GVA captures where economic activity occurs, while GDHI captures where household income is received. The latter is being cushioned through transfers and the UK鈥檚 commuting economy. Comparing the two reveals how local production shocks spread through the wider economy via commuting patterns, income ownership, fiscal redistribution and interregional dependence."

Dr Eleonora Alabrese, co-author, said:

"Our findings suggest a troubling spiral. Austerity drove protest voting in left-behind places, and the anti-immigrant narrative proved a powerful tool precisely in areas with little direct experience of immigration. Brexit was the result — yet the economic costs have landed elsewhere: on the internationally integrated, high-immigration areas. The places that generated the political mandate for Brexit have, so far, been relatively shielded from its economic consequences.

"That is not a coincidence — it is a pattern that risks feeding further disillusionment and further support for the politics that produced Brexit in the first place. Brexit may be a self-sustaining political economy."

Professor Fetzer added:

"Brexit did not make left-behind places meaningfully richer. It made the UK poorer, with the largest losses concentrated in the places that were most exposed to European integration. That is why the regional pattern looks like levelling up only in the most perverse sense: not by lifting lagging regions, but by pulling down the places that were doing best."

Notes:

• The paper is available at: /fac/soc/economics/research/workingpapers/2026/twerp_1617-fetzer.pdf
• The authors estimate Brexit鈥檚 regional economic impact using placebo-weighted synthetic control methods. They construct counterfactual economic trajectories for UK local authorities, ITL regions and constituent countries using a wide range of donor-pool specifications and evaluates both post-2016 and post-2020 treatment windows.
• The analysis covers real GVA and GDHI, enabling the researchers to distinguish between where output is produced and where household income is ultimately received.
• An interactive explorer of the findings and regional estimates, their sensitivity along with broader narration that is specific to different areas can be found on https://www.brexitcost.org.