Brexit is happening
British exports to European Union swell as talks enter next stage
As Brexit gets nearer, British firms are exporting more to the other 27 countries in the European Union, a development that’s likely to focus minds as discussions over the country’s future relationship with the bloc start up again.
Official figures released Friday show that seven of the top 10 destinations for British exports in 2017 were EU countries. Selling everything from cars to pharmaceuticals and gin, British firms exported some 37.7 billion pounds (US$53 billion) worth of goods to Germany in 2017, around 13 per cent more than the year before. Germany accounted for 11 per cent of British exports, up a tad on the year before, and second overall behind the United States.
Other EU countries in the top 10 export destinations included France, the Netherlands and Ireland, the latter being the only EU country to share a land border with the United Kingdom and the source of much debate surrounding post-Brexit scenarios. All witnessed annual increases akin to Germany’s. Overall, EU countries accounted for 48.8 per cent of British goods exports to the EU in 2017, up from 48.2 per cent the year before.
The increasing importance of the EU as a destination for British goods is largely due to the fact that Britain remains a member of the EU until March next year, with exporters also enjoying a boon from the sharp fall in the value of the pound in the wake of the country’s vote to leave the bloc in June 2016.
Bank of England Governor Mark Carney has called it a “sweet spot,” with exporters benefiting from the near 20 per cent fall in the pound’s value against the euro “in anticipation of a Brexit that has not yet happened.” The euro, which is used by 19 EU countries, is now worth 0.89 pound, compared with around 0.75 pound before the referendum.
But Brexit is happening and no one, it seems, quite knows what it will mean. That’s a particular problem for businesses that have enjoyed tariff-free trade with the EU for decades thanks to the bloc’s single market and its customs union, a looser trading bloc that mainly covers goods.
The minority Conservative British government has made clear that Brexit means leaving both the single market and the customs union. However, it hopes to negotiate a new free trade agreement that will prevent the return of costly customs checks and tariffs.
No one is sure how that can happen and discussions this week within the government failed to clarify what its vision is for the post-Brexit relationship.