Imports to EU in relative 25% fall following Brexit

THE first year of the UK’s post-Brexit trade agreement with the European Union saw a “major shock” with imports falling by 25% relative to those from elsewhere, research by academics has found.

But exports to the bloc avoided a sustained decline, with a smaller and only temporary drop relative to the rest of the world, the analysis found.

The Centre for Economic Performance (CEP) at the London School of Economics and Political Science, which produced the analysis, claims it is the most comprehensive study yet into the effects of Brexit on trade between the UK and EU. The research centre says it found trade between the UK and EU held stable after the 2016 Brexit referendum until the end of 2020, and there was no evidence that uncertainty and anticipation effects led to a significant decline in relative trade in that period.

But a “substantial reorientation” occurred after the introduction of the UK-EU Trade and Cooperation Agreement (TCA) at the start of 2021, it said.

“Although it is surprising that imports were hit harder than exports during the first year of the TCA, it would be a mistake to conclude that exporters were unaffected. The number of export relationships with the EU fell sharply in 2021,” Rebecca Freeman, co-author of the report and associate of the CEP’s trade programme, said.

Analysis of changes in trade patterns for 1,200 products found a “sharp drop” in the number of trade relationships between UK exporters and EU importers, with “lower value relationships” hit particularly hard, according to the researchers. CEP said the finding is consistent with claims that the trading agreement has caused many smaller UK firms to stop exporting to the EU.

“The drop in the number of products the UK exported to its smallest European partners following the introduction of the TCA is remarkable,” co-author and PhD student at the University of Cambridge, Thomas Prayer, said.