Brexit Trade Challenges Deepen as Economists Warn of Growing Impact

Economists have issued a stark warning about the worsening effects of Brexit on UK-EU trade, highlighting a significant slump in the exchange of goods. According to a recent report from Aston University Business School in Birmingham, the impact of the Brexit trade deal, signed in 2020, has become increasingly severe over the past three years.

The report reveals that the value of UK goods exports to the EU has plummeted by 27%, while imports from the EU have dropped by 32%. These declines are compared to projections of what might have occurred had Brexit not taken place. Despite some increases in exports of specific sectors like tobacco, railway equipment, and aircraft, the overall picture is grim. The range of exported goods has contracted notably, with 1,645 fewer types of British products being shipped to each EU country.

Interestingly, the report does not cover the service sector, which has performed better than anticipated since Brexit. However, the authors noted a “noticeable worsening” in EU-UK trade throughout 2023, with the negative impacts of the trade agreement becoming more pronounced compared to previous years.

Industries hit hardest include agriculture, textiles, and wood and paper manufacturing, with many sub-sectors experiencing more than a 50% decline in export values. The most dramatic drop has been in the export of edible fruit and nuts, which saw a staggering decrease of 73.5%.

Smaller and more distant EU nations have been particularly affected by the downturn in trade, while exchanges with larger, closer countries have experienced less disruption. The report suggests that many smaller UK producers have ceased exporting to certain EU countries due to the complexities introduced by post-Brexit trade regulations and non-tariff barriers.

Jun Du, one of the study’s authors, pointed out that the introduction of additional rules, such as safety checks and labeling requirements, has exacerbated these challenges. “While these measures aim to protect consumers, competition, and the environment, they also impose significant difficulties and costs on traders,” Du explained to the BBC’s Today programme.

Mary Quicke, from Quicke’s Cheeses in Devon, shared her struggles with the increased regulatory burden. She revealed to the BBC that her company previously supplied four EU customers directly but has since had to shift these accounts due to the overwhelming paperwork. “We simply don’t have the resources to manage the paperwork,” she said.

In response, a government spokesperson assured that efforts will be made to enhance the trade and investment relationship with the EU and to eliminate unnecessary trade barriers. However, the spokesperson emphasized that there will be no return to the single market, customs union, or freedom of movement.

It was reports that recent discussions with government officials have included consultations with business representatives on potential strategies to “reset” the trade relationship with the EU, with an emphasis on “economic security.” Nevertheless, meaningful progress on this front is not expected until next year, when a new European Commission will be in place and the UK will have finalized its own industrial and trade strategies.

Overall, the report underscores a deepening crisis in UK-EU trade relations, driven by the ongoing complexities of Brexit and the evolving regulatory landscape. As businesses continue to navigate these challenges, the call for a reevaluation of the trade framework remains pressing.