Don’t blame Brexit for Britain missing out on global trade boom, says ex-adviser to PM

BREXIT is not to blame for Britain’s absence from a boom in global trade, a former adviser to Theresa May has said.

The UK’S disappointing trade performance since the pandemic has been driven more by weak exports to the rest of the world, according to Raoul Ruparel. Mr Ruparel, who is now at Deloitte, said the shortfall is “not entirely down to Brexit and likely not even mainly down to Brexit”.

In a new analysis, he found the UK appeared to miss out on surging demand from the United States that has buoyed several other exporters.

Mr Ruparel said: “By far the larger factor is the poor performance of UK exports to non-eu countries, especially the US. This is partly because the UK found itself poorly placed to take advantage of the increased demand since it seemed to largely fall in areas where the UK is not a major exporter.”

Globally, goods exports are about 10pc higher than pre-pandemic levels, and 5.5pc higher in advanced economies. In the UK, however, exports remain around 12pc lower.

Demand for imports surged in the US last year as huge levels of fiscal stimulus brought in by Donald Trump and Joe Biden spurred resurgent demand in the wake of the pandemic.

American importers snapped up electronics and metals with particular aplomb – sectors in which Mr Ruparel noted “the UK is a very minor exporter”.

There was also high demand for chemicals, a sector in which the UK is stronger. The report noted although UK chemicals exports to the US rose last year, it was only back to 2016 levels.

“It is possible this is partly due to additional Brexit impacts with the sector as a whole becoming less competitive due to additional costs and supply chain disruption,” he said.

“That said, this is a phenomenon that started while the UK was still in the EU so it is hard to put it down entirely to Brexit.”

The Office for Budget Responsibility (OBR), the fiscal watchdog, predicts Brexit will eventually knock 15pc off the value of trade to Britain’s economy.

Mr Ruparel said: “It is easy to reach for [Brexit] as an excuse for all problems but doing so risks obscuring the other complex trade challenges business are facing and makes it harder to find the right solutions.”

The Government has set a goal of the UK reaching £1trillion a year in exports by 2030, as part of a “Global Britain” push to grow trade with far-flung markets. The UK had hoped to strike a fully fledged free trade deal with the US, but has received a cool reception from Joe Biden’s White House, which has signalled it does not consider it to be a priority.

Mr Ruparel said the recent shortfall showed ministers should examine where demand is high as they try to carve out a post-brexit trade strategy. “I think it’s a question for the Government and for where people want this country to go,” he said.

He pushed back against suggestions that the challenge of adapting to the Trade and Cooperation Agreement with the European Union, which came into effect at the start of last year, may have reduced companies’ dealing beyond the bloc.

“You would expect that to show up both in exports to the EU, and non-eu exports … That’s not really what we’re seeing. What we’re seeing is that EU exports have managed to recover, whereas non-eu exports haven’t.”