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The impacts of Covid-19 and Brexit on the UK economy: early evidence in 2021

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  • Josh De Lyon
  • Swati Dhingra

Abstract

We use real-time firm survey data to describe trends in the UK economy in early 2021. As of April 2021, business activity and expectations for the future have improved. However, real wage growth is down and firms are reporting that average input costs have increased. Firms are reporting that Brexit has affected their operations, leading to a fall in exports to the EU for a quarter of exporters and a fall in imports from the EU for a third of importers. Increased border costs are the most cited Brexit-related issue. We discuss how policies can support workers and firms in adapting to the structural changes from Covid-19 and Brexit.

Suggested Citation

  • Josh De Lyon & Swati Dhingra, 2021. "The impacts of Covid-19 and Brexit on the UK economy: early evidence in 2021," CEP Covid-19 Analyses cepcovid-19-021, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepcvd:cepcovid-19-021
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    References listed on IDEAS

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    1. Richard Davies, 2021. "Prices and inflation in a pandemic - a micro data approach," CEP Covid-19 Analyses cepcovid-19-017, Centre for Economic Performance, LSE.
    2. Brian Bell & Mihai Codreanu & Stephen Machin, 2020. "What can previous recessions tell us about the Covid-19 downturn?," CEP Covid-19 Analyses cepcovid-19-007, Centre for Economic Performance, LSE.
    3. De Lyon, Josh & Pessoa, Joao Paulo, 2021. "Worker and firm responses to trade shocks: The UK-China case," European Economic Review, Elsevier, vol. 133(C).
    4. Peter Lambert & John Van Reenen, 2021. "A major wave of UK business closures by April 2021? The scale of the problem and what can be done," CEP Covid-19 Analyses cepcovid-19-016, Centre for Economic Performance, LSE.
    5. Capucine Riom & Anna Valero, 2020. "The business response to Covid-19: the CEP-CBI survey on technology adoption," CEP Covid-19 Analyses cepcovid-19-009, Centre for Economic Performance, LSE.
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    1. Swati Dhingra & Thomas Sampson, 2022. "Expecting Brexit," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 495-519, August.
    2. Ahmed Rakha & Hansi Hettiarachchi & Dina Rady & Mohamed Medhat Gaber & Emad Rakha & Mohammed M. Abdelsamea, 2021. "Predicting the Economic Impact of the COVID-19 Pandemic in the United Kingdom Using Time-Series Mining," Economies, MDPI, vol. 9(4), pages 1-19, September.
    3. Dimitrios Paraskevadakis & Adeyeri Ifeoluwa, 2022. "An industry-level analysis of the post-Brexit and post-Covid 19 Ro-Ro ferry market and critical maritime freight transport links between the UK and the EU," Journal of Shipping and Trade, Springer, vol. 7(1), pages 1-33, December.
    4. Jun Du & Oleksandr Shepotylo & Xiaocan Yuan, 2025. "How did the Brexit uncertainty impact services exports of UK firms?," Journal of International Business Policy, Palgrave Macmillan, vol. 8(1), pages 80-104, March.
    5. Paul Lavery & Marina Spaliara & Holger Görg, 2024. "Private equity buyouts & firm exporting in crisis periods: Exploring a new channel," Working Papers 2024_09, Business School - Economics, University of Glasgow.
    6. Lavery, Paul & Spaliara, Marina-Eliza & Görg, Holger, 2024. "Private equity buyouts & firm exporting in crisis periods: Exploring a new channel," Open Access Publications from Kiel Institute for the World Economy 306864, Kiel Institute for the World Economy.
    7. Raghav Gupta & Md Mahadi Hasan & Syed Zahurul Islam & Tahmina Yasmin & Jasim Uddin, 2023. "Evaluating the Brexit and COVID-19’s influence on the UK economy: A data analysis," PLOS ONE, Public Library of Science, vol. 18(6), pages 1-33, June.

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