Brexit: A quarter of EU imports shrink as a result of the divorce

BREXIT BRITAIN’S post-exit trade arrangement with the EU saw a “major shock” in its first year, with imports falling by 25% compared to elsewhere.

The alarming drop was discovered by the Centre for Economic Performance (CEP) at the London School of Economics and Political Science in what they claim is the most comprehensive assessment yet of the consequences of Brexit on commerce between the UK and the EU. It did discover, however, that exports to the bloc avoided such a significant decline, instead of experiencing a smaller and transitory drop.

According to the CEP, commerce between the UK and the EU has remained constant since the referendum in 2016.

It went on to say that there was little indication that uncertainty and expectation – two of the most harmful post-Brexit pressures for the economy – had any significant impact on relative trade.

However, the implementation of the UK-EU Trade and Cooperation Agreement (TCA) at the start of 2021 caused a “substantial reorientation” in business.

The research, titled Unravelling Deep Integration: UK Trade After Brexit, examines the first year of trade under the deal and does not account for long-term implications.

It called the change a “major shock.”

The paper said: “The UK’s departure from the EU’s single market and customs union at the start of 2021 caused a major shock to UK-EU trade.

“We estimate that the new TCA trade relationship led to a sudden and persistent 25 percent fall in relative UK imports from the EU.”

Rebecca Freeman, co-author of the report clarified that exports were still affected by the agreement, albeit less dramatically.

She said: “Although it is surprising that imports were hit harder than exports during the first year of the TCA, it would be a mistake to conclude that exporters were unaffected.

“The number of export relationships with the EU fell sharply in 2021.”

According to an analysis of changes in trade patterns for 1,200 products, “lower value relationships” were hit particularly hard for exports to the EU.

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