A damning report has revealed that British exports have been hit with a £27 billion loss as a result of Brexit.
The paper by the Centre for Economic Performance (CEP) has found that Boris Johnson’s Trade and Cooperation Agreement (TCA) has reduced total goods exports from the UK by an estimated £27bn (or 6.4 per cent) in 2022 – due to a 13.2 per cent fall in the value of goods exported to the EU.
It comes as the government prepares to open talks in the new year for a Brexit deal reset with the EU but is being pressed to make significant compromises on allowing the European Court of Justice to have jurisdiction in the UK and allowing free movement for young people.
The CEP, based at the London School of Economics and Political Science (LSE), uses data from more than 100,000 firms to estimate the gap between the actual value of exports under the TCA and what would have been expected had the UK remained in the EU.
It finds that 14 per cent of firms (around 16,400 firms) that had previously exported to the EU stopped doing so after the TCA came into force in January 2021.
The report claims that among firms that continued exporting to the EU, the TCA reduced the average value of EU exports by 30 per cent for the smallest fifth of firms (with six or fewer employees) and by 15 percent for the middle fifth (between 17 and 40 employees).
By contrast, exports by the top fifth of firms, those with more than 107 employees, were not affected by the TCA.
The report noted: “The success of larger firms in maintaining their export levels dampened the decline in aggregate trade.”
The report appears to confirm concerns that Britain’s exit from the European single market and customs union has been particularly harmful for exports.
Brexit has brought in a new series of regulations and checks at the border with businesses also having to label items as “not for export to the EU”.
One of the UK’s foremost experts said that the report appeared to confirm concerns about post Brexit Britain.
Marco Forgione, Director General of the Chartered Institute of Export & International Trade said: “This report reinforces the key points we have been raising with government since the TCA came into force. There has been a significant drop in SME’s trading with the EU, these businesses find the new requirements too complex, they've reacted to the many stories of problems with customs processes, and they don’t have the expertise or staff to cope with the extra rules and regulations now in place.”
“Although larger firms tend to have departments dedicated to customs to ensure the smooth transit of goods between the UK to the EU, there have been less negative impact from them, but even they are not immune to problems. We are working with a major exporter of chicken products, and just last week had four shipments rejected because of one missing digit on a customs form. That cost them over £80,000.”
He warned that “there is a real danger EU based producers will stop trading with the UK.”
Mr Forgione went on: “We need to focus on giving SMEs in the UK and EU the expertise and knowledge they need to trade competitively and compliantly with each other, as the EU and UK markets are vital to consumers and businesses on both sides.”
