The Center for Economic Performance (CEP) at the London School of Economics and Political Science has seen the shocking downfall of what it claims is the most comprehensive study to date into the effects of Brexit on trade between the United United and EU. He found, however, that exports to the bloc avoided such a dramatic fall, with a smaller and temporary decline.
The CEP said it found trade between the UK and the EU was stable after the 2016 referendum until 2020.
He added that there was no evidence that uncertainty and anticipation – often heralded as among the most damaging post-Brexit forces for the economy – had had a substantial impact on relative trade.
However, trade has been hit by a “substantial shift” following the introduction of the UK-EU Trade and Cooperation Agreement (TCA) in early 2021.
The paper, titled Unraveling Deep Integration: UK Trade In The Wake Of Brexit, analyzes the first year of trade under the deal and does not consider long-term effects.
He described the change as a “major shock”.
The newspaper said: “The UK’s departure from the EU’s single market and customs union at the start of 2021 has caused a major shock to trade between the UK and the EU.
“We estimate that the new TCA trade relationship has resulted in a sudden and persistent decline of 25% in relative UK imports from the EU.”
Rebecca Freeman, co-author of the report, said exports were still affected by the deal, although less dramatically.
She said: “While it is surprising that imports were hit harder than exports in the first year of the ACT, it would be a mistake to conclude that exporters were not affected.
“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’ have been particularly affected for exports to the EU.
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The CEP said the findings correlated with widespread claims that the trade deal had led many small UK businesses to stop exporting to the EU.
Cambridge co-author and PhD student Thomas Prayer said the decline in the number of products exported to the EU is “remarkable”.
He added: ‘It looks like the UK has just stopped selling a lot of products to smaller EU countries.
Thomas Sampson, another co-author and associate professor of economics at LSE, said: “The Trade and Cooperation Agreement has increased trade costs, driving down imports from the EU and reducing the number of products exported to the EU by UK traders. .
“These changes make the UK a more difficult place to do business.”
Co-author and UCL economics professor Kalina Manova said: “These findings suggest that UK businesses did not rush to adjust their business activity after the referendum, despite significantly increased uncertainty about the future trade relationship between the UK and the EU.
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“Once actual trading costs rose, however, they began to rapidly reorganize their global input sourcing outside the EU, while apparently adjusting their export sales more gradually.”
A government spokesperson said: “Through our export support service, expanded export academies and a historic export strategy, we are ensuring that businesses of all sizes have the support they need to trade effectively with Europe and seize new opportunities as we strike trade deals around the world.
“Given the impact of Covid-19 on global supply chains, we have introduced phased import controls throughout 2022 to give businesses more time to prepare.
“Through our targeted multimedia campaign and a series of industry webinars, businesses are also directed to relevant import information and support to help them.”
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Source: www.express.co.uk
This notice was published: 2022-04-25 23:01:00