Economists are warning that red tape caused by Brexit is affecting UK-EU goods trade and causing exports to plummet, with the situation worsening. This is according to a report by the Birmingham-based Aston University Business School which covers the three-year period after the Brexit trade deal was finalised. The report, which is the most comprehensive of its kind, shows that the value of UK goods exports to the EU fell by 27%, and import goods by 32%. The report also revealed that the variety of trade export goods has dropped by 1,645 types of British exports to every EU country. However, tobacco, railway, and aircraft goods exports have increased.
The paper hints at potential sector shifts post-Brexit, suggesting that smaller British producers may have given up hope of exporting small amounts to some EU nations ever since the creation of many forms of post-Brexit trade red tape or non-tariff barriers. Farmers, clothing makers, and wood and paper manufacturers have been among the hardest hit industries with many sub-sectors’ EU export value falling by well-over half. Furthermore, the biggest drop in export value was noted in edible fruit and nuts where the value dropped 73.5%. Trade with smaller and more distant countries in the EU has been hit far worse than trade with larger and closer countries.
Despite the negative findings, the report does not include the service sector. This sector is one of few impacted by Brexit shown to have held its own. “The negative impacts of the [trade agreement] have intensified over time, with 2023 showing more pronounced trade declines than previous years,” the authors added.
The findings follow a warning to Prime Minister Boris Johnson from the food and drink industry that there would be “permanent damage” to exports from the UK if the current Brexit trade deal with the EU wasn’t changed. Already, the complexities of this trade agreement have seen companies such as Kellogg’s, BMW, and Marks & Spencer increase pricing for consumers, resulting in a substantial decrease in trade. The UK government has vowed to work towards “tearing down unnecessary trade barriers” with the EU, the latter of which working on new industrial and trade strategies to begin rolling out in 2022
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