Matthew Lynn:

Our exports to the European Union would collapse. There would be shortages of fresh vegetables at Tesco and Sainsbury’s. Factories would close as supply chains seized up, and we would be plunged into a deep recession.

Rewind a couple of years, and “trade experts” of one sort or another were unanimous that leaving the single market would inflict catastrophic damage on the British economy. But hold on – trade data out yesterday show that not only were those predictions wrong, but wrong on a scale that has seldom been witnessed before.

After some disruption during January and February, our exports to the rest of Europe are now growing again. So are our imports, although more slowly than they are from the rest of the world. There are three important points to draw from that.

The single market is wildly oversold and doesn’t make much difference one way or another. The UK is returning to a historic trading relationship with the rest of the world, which means trade with the EU will fall a lot more over the next few years.

The EU is also losing its lucrative 40-year grip on the British market. Perhaps most importantly, leaving the trading bloc is scarcely affecting the UK – and may soon start to help it instead.

With lockdown easing, generous support schemes in place, robust employment and people desperate to start spending money again, the UK economy is on track to recover robustly from the pandemic. Overall, GDP was up by 2.3pc during April.

We should have clawed our way back to the level of output from before anyone had ever heard of Covid by the autumn. That is a far better outcome than could have been expected at the start of the year, and so long as the Chancellor doesn’t choke off the recovery with crazy tax rises there is no reason why it should not continue.

It is the trade data that are more revealing. After some sharp falls in January and February, when both the transition period came to an end and we went into a fresh lockdown, our exports to the EU are now rising again. We shipped £12.9bn of goods to Europe in April – £300m more than in March. But we sold more to the rest of the world – £13.6bn – and we imported more from countries outside the EU as well.

Overall, our imports from the rest of the world hit a record high, and are continuing to rise strongly, while our imports from the EU are struggling to recover.

True, there are some one-off factors in that. We are not buying cars from Germany in the same way we once did because the dealers have been closed, and we are not buying clothes from Italy and France because we have not had anywhere to go.

Even so, there is no mistaking what is happening. We are witnessing a wholly predictable shift in British trade away from the EU, and there is little reason to believe that will slow down any time soon.

There are three important lessons to draw from the way trade has already started to shift since the transition period ended.

First, the single market is wildly oversold, and so is the textbook “gravity model” of trade, on which the Treasury and most trade experts relied to forecast catastrophe once we left the bloc. In truth, even though its cheerleaders like to sell it as the EU’S crowning achievement, and a jewel that must be protected at all cost, it does not make much difference one way or the other, and certainly not between major developed countries.

It is tariffs and quotas that count, not regulatory alignment, and those are dealt with under World Trade Organisation rules, and were set aside by the trade agreement. Beyond that, it is an irrelevance.

Next, British trade is getting back to its long-term pattern. Our imports and exports from the EU were already falling even before we left, dropping from 55pc of the total over the last decade to 45pc.

Historically, however, even that was very high. According to parliamentary figures, in 1908 what is now the EU accounted for about 30pc of British exports. In 1948, that was down to about 20pc.

The Empire, as it then was, rose by 10 percentage points during the 1930s, as we introduced protectionist tariffs.

The important point is this. The 55pc after we joined the EU, and signed up for all its quotas and tariffs, was an aberration, and way above anything seen in our history.

Roughly 25pc of our trade with the rest of Europe is the true long-term figure for an offshore economy, with links across the Atlantic, and a historic presence in the Pacific. Within five years, we will probably be back to that level, implying it has a lot further still to fall.

Finally, it should surely be clear that the EU is losing its grip on the lucrative British market. It is significant that imports from the rest of the world, only three months into the new trading arrangement, are already rising much faster than they are from Europe. It will take time, but we should expect that to continue.

As we sign trade deals around the world we will import more food from north Africa, Turkey and South America (as well as Australia). We will import clothing and footwear from Africa, electric cars from the US and electronics from the Pacific. That won’t decimate any European companies, but at the margin it will hurt them.

In reality, the Brexit fear-mongers were spectacularly wrong. Sure, there has been a period of adjustment and some bumps along the way. But the UK economy has already largely got over the adjustment, and begun a historic realignment away from the EU – and one that isn’t going to be reversed now.

‘Our imports from the rest of the world are continuing to rise strongly, while imports from the EU struggle’