STRUCTURAL TRANSFORMATION OF THE UK ECONOMY AS A RESULT OF BREXIT: A COMPARATIVE ANALYSIS

Abstract

The article examines the structural transformation of the UK economy as a result of Brexit based on a comparative analysis of the periods before and after leaving the EU. The key economic prerequisites for Brexit are considered, including criticism of the UK's financial contributions to the EU budget as the second largest economy of the union, arguments regarding the EU's protectionist policies in agriculture, industry and services trade, which created an imbalance for the service-oriented British economy. Four main channels of Brexit's impact on the national economy have been identified: sustained growth of economic uncertainty with negative effects on investment activity, significant decline in international investors' confidence in British bonds, substantial increase in financing costs for British enterprises, and cardinal transformation of trade flows between the UK and the EU. Sectoral and regional disparities in adaptation to post-Brexit realities have been identified, with the greatest vulnerability found in Eastern European regions and territories with high concentration of low-productivity industries. Changes in migration patterns have been determined, with a shift from EU citizens, who previously constituted the majority of net migration, to non-EU citizens, predominantly in healthcare, social care and higher education sectors. A significant reduction in trade flows with the EU has been noted due to the introduction of customs checks, rules of origin requirements and regulatory divergences against the background of forming new trade partnerships, particularly the historic agreement with the USA. The transformation of the legislative framework through the retention of thousands of EU laws in national legislation and their gradual repeal or adaptation has been examined. Fiscal consequences for the state budget through reduced tax revenues and the need for compensatory rate increases have been analyzed. The conclusion has been drawn about the limitation of long-term economic growth potential due to the loss of full access to the EU single market, reduction of labor resources, weakening of investment attractiveness and structural deformations in productivity, creating persistent barriers to convergence with European economic development indicators.