Study indicates that 24 months of Brexit cost UK USD34 billion in trade
Date
12/21/2024 2:00:21 AM
(MENAFN) Britain’s exit from the European Union resulted in an estimated $34 billion in lost trade during the first two years under the EU-UK Trade and Cooperation Agreement (TCA), according to a new study by the Center for Economic Performance (CEP) at the London School of Economics. The report reveals that small and medium-sized enterprises (SMEs) were disproportionately affected by the trade disruptions. Around 14% of UK businesses that previously exported to the EU ceased their exports entirely after the TCA took effect in January 2021.
The research, based on data from over 100,000 companies, found that UK goods exports dropped by 6.4% in 2022 compared to pre-Brexit expectations. Exports to the EU saw an even steeper decline, falling by 13.2%, due to new trade barriers imposed by the TCA.
The study also highlighted that non-tariff barriers such as customs checks, paperwork, and regulatory compliance have created significant challenges for businesses. Larger companies have managed to adapt, but smaller firms have struggled with the increased costs and complexities due to their limited resources and expertise.
Imports from the EU also declined, although by a smaller margin of 3.1%. To offset these losses, many UK importers have turned to suppliers outside the EU.
While the total trade reduction has been less severe than the 15% predicted by the Office for Budget Responsibility, Thomas Sampson, a co-author of the study, warned that the long-term consequences are still uncertain. The study’s findings come as the UK government prepares for upcoming negotiations with the EU to update the TCA. This post-Brexit deal, signed in December 2020, governs trade, security, and cooperation following the UK’s departure from the EU's single market and customs union.
Brexit has disrupted UK-EU trade, increasing costs for businesses and potentially leading to long-term GDP losses averaging 0.6% across the 27 EU member states. Sectors such as automotive and agriculture have been especially hard-hit by regulatory changes and reduced access to UK markets.
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