Analysing The Political Economy

Brexit - UK-EU trade relationships crash

Alongside the non-stop rotation of economic bad news for Britain that is causing Stirling to rapidly fall in value, leading to yet more inflation and the talk from analysts that Britain is heading for a recession (or worse – stagflation), Brexit keeps piling on the pressure.

The UK’s supposed post-Brexit trade deal with the EU has caused what can only be described as a “steep decline” in the number of trading relationships Britain has with the world’s biggest trading bloc.

As often reported it was red tape at the border curbing the ability of smaller firms to export, new research has found.

Although UK exports to the EU have now recovered to somewhere around pre-pandemic levels, analysis of trading data shows the number of relationships between buyers and sellers tumbled by a third after the introduction of the EU-UK trade deal in January 2021.

These findings come from the LSE Centre for Economic Performance. They echo chime with warnings from other business groups that smaller firms have essentially struggled to absorb customs controls, VAT and regulatory red tape. This, of course, is no surprise as small business has less capacity and expertise to deal with such matters.

The result is that many have simply stopped exporting to the bloc altogether, thereby severing links they had built up over years.

This is the LSE’s most comprehensive study to date of the effects of Brexit on UK-EU trade which focused on trade pattern changes for 1,200 individual product lines traded with the EU.



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