Brexit continues to exert “profound and ongoing stifling effects” on the trade of goods between the United Kingdom and the European Union, exacerbating economic challenges, a new report indicates. Research conducted by Aston University in England revealed that from 2021 to 2023, the UK’s annual goods exports to the EU were estimated to be 17% lower than they would have been without Brexit. Most sectors have experienced a decline in exports since 2021, the report noted.
The researchers in their Tuesday publication emphasized that the detrimental effects of Brexit have worsened over time, with 2023 seeing sharper declines in trade than earlier years. “It appears that the changes in UK-EU trade relations since Brexit are not just short-term disruptions but are indicative of lasting structural shifts,” they stated.
The conclusion of Britain’s withdrawal from the EU was marked on December 24, 2020, with a trade deal, after a contentious referendum in 2016.
These findings pose significant challenges for the Labour government, which has prioritized economic growth since winning the national election in July. Despite the pressures, UK Prime Minister Keir Starmer, addressing economic strategies this week, declared a focus on economic growth in the forthcoming government budget but dismissed rejoining the EU single market or customs union.
Exports, nearly equally divided between goods and services, constitute about a third of the UK’s GDP, with the EU being the destination for 48% of its goods exports.
The report emphasized the critical nature of UK-EU trade relations for economic stability and growth, noting a substantial decrease in the variety of British goods exported to the EU. Industries such as food and clothing, particularly among small businesses, have scaled back exports facing heightened costs and bureaucratic hurdles.
Professor Jun Du, the study’s lead author, pointed out that the post-Brexit trade deal has erected significant barriers to UK-EU trade. The researchers suggest that the government should focus on sector-specific agreements, especially in areas like agriculture, and leverage digital technology to streamline customs processes and align regulations more closely with the EU.
“Without swift governmental action, the UK risks further economic decline and a diminished role in the global market,” Du cautioned.
This report aligns with findings from the UK in a Changing Europe think tank, which estimated Brexit’s impact on UK GDP between 2% and 4% from the 2016 referendum to July last year. The Office for Budget Responsibility anticipates a long-term reduction of about 4% in Britain’s output relative to if it had remained in the EU.
Sophie Hale, principal economist at the Resolution Foundation, expressed on X Tuesday that the Aston University findings make a compelling economic argument for an ambitious and swift UK-EU reset. Meanwhile, a UK government spokesperson affirmed the commitment to enhancing the trade and investment relationship with the EU, focusing on reducing unnecessary trade barriers but clarified that there would be no return to the single market, customs union, or freedom of movement.
While goods exports have faltered, service exports to the EU have reached a new high, with the government reporting a record £172 billion ($227 billion) in the 12 months leading up to March.
