Economic and Social Research Institute analysis found ‘substantial reduction in number of products traded’
Trade from the UK to the EU is down 16% on the levels anticipated had Brexit not happened, a new report has found.
Meanwhile trade from the EU to the UK has dropped even further, by 20%, relative to a scenario in which Brexit had not occurred, according to research published on Wednesday by the Economic and Social Research Institute.
Using UK and EU data it found that measuring the impact of Brexit on UK-EU trade can give varied results depending on the data source and the comparison group used.
The report, How has Brexit changed EU-UK trade flows?, found the impact of Brexit on EU-UK trade does not appear that large if compared to UK trade with the rest of the world, as global exports from Britain had been growing slowly. But when the UK’s trade with the rest of the world was compared with the EU’s faster-growing performance with more than 200 trading partners, the picture showed a marked difference.
The analysis, based on monthly HMRC and country-level Eurostat data, found “a substantial reduction in the number of products traded from the UK to the EU”.
The ESRI said the goods trade between the EU and UK had increased following a sharp fall in the early months of 2021.
Trade has recovered to most of its pre-2021 level in value terms. However, it remains significantly below what it might otherwise have been if it had followed the same growth rate as other trade partners.
The ESRI noted that global exports of goods from the UK have been growing slowly – a trend it said may have been partly the result of “Brexit spill-over” effects on supply chains. It said for most countries across the EU, the size of the impact of Brexit was broadly similar for both exports and imports.
Recovering lost trade with Europe should be a top priority as the nation enters a recession, according to Peter Norris, chair of the Virgin group and co-convener of the Brexit monitoring group, the UK Trade and Business Commission.
He continued, “The government can achieve this by removing the trade barriers that Brexit created.
According to the ESRI, Ireland stands out as having experienced a particularly significant decrease in imports from the UK compared to its other international trade patterns.
There has been no discernible effect of Brexit on the overall levels of trade to date, though exports from Ireland to the UK continue to perform in line with those of other markets.
The increased trade between Ireland and Northern Ireland, according to researchers, may be to blame.
The ESRI acknowledged that some product types may have seen a decline in exports to the UK, but the study did not explore whether there was variation across product types. Additionally, the study did not look at the services industry.