IRELAND, Dublin. Research released on the “Brexit effect” for UK-EU trade shows a significant decline in trade flows by almost one-fifth. Analysts combined UK-reported data for its trade with the EU and EU data for its trade with the rest of the world to use as the appropriate benchmark for comparison.
The Economic and Social Research Institute (ESRI) released a paper estimating how Brexit has affected goods trade between the United Kingdom and European Union. ESRI found that UK-to-EU goods trade had declined by 16% and trade from the EU to the UK by 20% relative to the scenario in which Brexit had not occurred.
Although goods trade between the EU and UK recovered most of its previous level in value terms following the sharp fall in the early months of 2021, this recovery leaves it well below the levels that would have been expected if it had performed on a comparable level with other trade partners, ESRI pointed out in its press release.
According to the institute, measuring the impact of Brexit on UK-EU trade can give varied results depending on the data source and comparison group used. Global exports of goods from the UK have been growing slowly. This may have been partially a result of Brexit spillover effects on supply chains. The impact of Brexit on EU-UK trade, therefore, does not appear as large if compared to UK trade with the rest of the world as it does when compared to the faster-growing performance of EU trade.
Analysts at ESRI also looked across EU member states using a hybrid data approach combining a set of UK and EU data sources. They found that Brexit has led to a significant decline in trade with the UK in almost all cases, although by varying magnitudes. For most countries across the EU, the impact size is broadly similar for both export and imports.
While the results highlight the importance of the appropriate comparison group in assessing the impact of Brexit, this leaves open for future research the question of whether the patterns of relatively slow UK export growth to the rest of the world and more rapid import growth can themselves be attributed to a Brexit effect, perhaps via changing supply chains, ESRI pointed out.
Source: The Economic and Social Research Institute