Brexit caused ‘major disruption’ to EU-UK trade, finds study

Analysis has discovered that Brexit triggered ‘main disruption’ to EU-UK commerce.

The examine by the London Faculty of Economics (LSE) revealed that each exports and imports had been impacted by the UK’s withdrawal from the bloc in 2021, with many British corporations stopping commerce with the EU.

“A sudden and chronic 25% fall in UK imports from the EU” was discovered by the examine printed on Tuesday, in comparison with “a smaller and solely short-term decline in UK exports to the EU”.

However the LSE researchers added there was a “sharp drop within the variety of commerce relationships between UK exporters and EU importers, suggesting the brand new buying and selling relationship that emerged in 2021 “triggered many UK corporations to cease exporting to the EU”.

The UK voted to depart the EU in June 2016, nevertheless it didn’t exit the EU’s single market and customs union till 1 January 2021, when the withdrawal settlement got here into impact.

Below the brand new Commerce and Cooperation Settlement (TCA) struck between the pair, UK-EU commerce has confronted extra pink tape, customs controls and taxes, impacting each events.

The examine discovered “no proof” that Brexit decreased the UK’s commerce with the EU relative to the remainder of the world earlier than the brand new commerce settlement was applied.

To disentangle the impact of Brexit from different occasions, such because the Covid-19 pandemic, the researchers in contrast the expansion within the UK’s commerce with the EU to the UK’s commerce with the remainder of the world, alongside US and EU commerce with international locations aside from Britain.

This allowed them to isolate how Brexit affected UK-EU commerce.

The examine mentioned “there isn’t any signal that Brexit has led to a sustained change within the geography of UK export values, both following the referendum or after the introduction of the brand new commerce settlement in 2021.

“UK imports from the EU abruptly declined by about 25% greater than UK imports from the remainder of the world after the TCA got here into impact, and this decline continued all through 2021,” it continued.

Researchers mentioned it was “stunning” that Brexit had a higher influence on imports than exports in 2021, notably for the reason that UK delayed the introduction of many customs checks on EU items till 2022.

Nevertheless, they mentioned it “can be a mistake to conclude that UK exporters had been unaffected by Brexit”.

Their examine discovered the 2021 commerce settlement triggered the variety of UK “export relationships” with the EU to fall by 30%, which they are saying was because of the ending of “low-value” commerce between the EU-UK.

What this implies, say the researchers, is that smaller UK exporters stopped promoting to the EU as the prices of exporting elevated, whereas bigger UK corporations which make up the vast majority of UK exports weren’t “severely hampered.”

“Though our evaluation supplies a wealthy image of how Brexit has affected UK commerce up to now,” mentioned the researchers. “Some caveats are so as.”

Notably, they solely studied the primary 12 months of the brand new EU-UK buying and selling relationship, hinting that will replace their findings as extra information grew to become accessible.