Wednesday, September 18, 2024
Brexit is ‘stifling’ exports and imports
The paper says that modelling by the economists has estimated that annual exports to the EU are 17 per cent lower and imports 23 per cent behind where they would have been if Brexit had not occurred, with negative impacts increasing during 2023:
“The findings reveal a sharp decline in both UK exports and imports with the EU, underscoring the enduring challenges posed by Brexit on the UK’s trade competitiveness,” the authors wrote in the paper published on Tuesday.
Its findings are likely to fuel calls for the government to be more ambitious in improving trade ties with Brussels.
The research was led by Jun Du, a professor of economics at Aston who has modelled Brexit impacts since the EU-UK Trade and Cooperation Agreement (TCA) came into force in January 2021.
Labour has ruled out rejoining the EU single market or forming a customs union, but promised in its manifesto to “tear down” barriers to trade with Europe by seeking other improvements.
These include a so-called veterinary agreement to reduce border checks on plant and food products, a deal to improve access for touring musicians, and steps to make it easier for UK professionals such as architects and lawyers to practise in the EU.
The UK wants to reduce border checks on trade with the EU involving plant and food products © Neil Hall/EPA/Shutterstock The research paper examined the extent to which Brexit had impacted individual sectors including agrifoods, wood, textiles and footwear, with larger companies in sectors such as autos and aerospace showing relatively more resilience to Brexit effects.
“These findings [indicate] the profound and ongoing stifling effects of the TCA on UK-EU trade,” it added. “The analysis reveals a heavily disrupted and weakening UK-EU supply chain post-TCA.”
The Aston University research builds on work by economists at the Resolution Foundation think-tank that warned that Brexit was squeezing the UK out of higher-productivity manufacturing activities that were reliant on integration with EU supply chains.
Sophie Hale, principal economist at the Resolution Foundation, said the findings show the “economic damage is far from over”, though it is unclear how much of the decline is caused by shifting to new trading arrangements, and how much is because of regulatory divergence with the EU.
“Either way, what is clear is the urgent need for Labour to act quickly on their UK-EU reset strategy to prevent further deterioration and protect the UK’s economic interests,” she added.
The research used sophisticated economic modelling to create a “synthetic UK”, sometimes known as a doppelgänger UK, that “exports and imports identically to the UK, but did not experience the change in its trade relationships with the EU”.
John Springford, a trade economist at the Centre for European Reform think-tank, said that while Du’s results differed from some other academic studies, the findings were in keeping with overall trade data.
“Jun Du and her colleagues’ paper fits with what we know in the aggregate data about UK goods trade: exports and imports to all destinations, in both the EU and the rest of the world, have grown more slowly than peer economies,” he said.
Of particular concern is Du’s finding that the UK’s relative performance in goods trade had deteriorated in 2023 when compared with similar economies, he added.
Du said the government should focus on three key areas to improve trade ties: specific sectoral negotiations in areas such as agrifoods and textiles, better use of digital technologies to streamline border transactions, and closer regulatory alignment with the EU.
The onus has to be on the new Labour government to sort this out, with rejoining the single market high on the agenda.
