Anindita Chatterjee
Updated on: October 12, 2024 12:42 pm GMT
A recent report reveals sharp declines in trade between the UK and EU, marking a significant impact from the Brexit Trade and Cooperation Agreement (TCA). This study from Aston Business School suggests that UK exports to the EU have plummeted by 27% since 2021, while imports have dropped by 32%. These figures highlight ongoing challenges for British businesses trying to navigate the post-Brexit trading landscape.
Decline in Trade Figures
The Aston Business School’s analysis underscores a considerable decrease in the volume of goods traded between the UK and EU. Between January 2021 and September 2023, the data indicates:
- 27% drop in UK exports to EU
- 32% drop in UK imports from EU
- Significant reduction in consumer goods exports
- Ongoing reliance on EU for intermediate and capital goods
These declines are not just a momentary setback but suggest a deeper structural shift in UK-EU trade. The report points out that the ramifications of these changes are worsening over time, with 2023 demonstrating more pronounced declines than in previous years.
Non-Tariff Measures and Their Impact
One of the main complications stemming from the TCA is the introduction of numerous non-tariff measures (NTMs). These include:
- Increased checks and documentation for goods
- Delays in implementing post-Brexit checks on imports
- Additional administrative burdens on British businesses
These hurdles have disrupted the efficient flow of trade, particularly affecting agriculture and food products. Concerns over rising prices have led to repeated delays of the planned checks on fruits and vegetables imported into Britain.
Long-term Consequences
The report concludes that the challenges to UK-EU trade are more than temporary disruptions. According to the study, the TCA has created enduring obstacles that are likely to persist, leading to a decline in the UK’s competitive edge in the European market.
“Trade isn’t just slower; it’s altering the landscape of goods exchanged,” said one of the report’s researchers. This long-term view presents a worrying outlook for businesses reliant on EU partnerships.
Broader Economic Concerns
Amidst these trade issues, other economic indicators signal challenges in Europe. Thomas Gitzel, chief economist at VP Bank, mentioned that the German economy, traditionally a key player in EU trade, is also showing signs of stagnation. He remarked, “The German economy seems to be going into hibernation.”
This sentiment echoes through a recent Bank of America Fund Manager Survey, which indicates rising optimism about potential cuts to US interest rates, although uncertainties remain about Europe’s recovery.
Conclusion
As the UK adapts to its new role outside the EU, the implications of the TCA continue to reverberate through the economy. The decline in trade figures highlights significant challenges that British businesses face, raising questions about the sustainability of the current trading environment. Addressing these obstacles will be crucial for regaining competitiveness and fostering a more robust trade relationship with Europe.
For more information, businesses and people can check out the full report from Aston Business School.
