Brexit deal impact ‘worsening’, economists say

Brexit red tape on British businesses has caused goods trade between the UK and EU to slump and the problem is getting worse, a study has warned.

Many smaller UK producers have given up exporting small amounts to the EU after facing more rules and regulations, a report by Aston University Business School found.

Between 2021 and 2023, the study found UK goods exports to the EU fell 27% and imported goods by 32% compared with what it predicts would have happened without Brexit.

The report does not include the service sector, which has performed better than many experts had expected since Brexit.

The variety of trade export goods has also dropped, the study found, with 1,645 fewer types of British products exported to every EU country.

The authors say this is due to smaller British producers giving up on exporting small consignments to some EU nations after facing increased red tape.

Mary Quicke of Quicke’s Cheeses in Devon told the BBC’s Today programme that she had found it “really, really difficult to deal with all the regulatory burdens”.

She said she used to supply four customers directly in the EU but “we had to give them away to somebody else”.

“We just don’t have the people to do the paperwork.”

The report said there was a “noticeable worsening of EU-UK trade in 2023”.

“The negative impacts of the [trade agreement] have intensified over time, with 2023 showing more pronounced trade declines than previous years,” it said.

Farmers, clothing makers, and wood and paper manufacturers have been among the hardest hit industries, with many sub-sectors’ EU export value falling by well-over half.

The biggest drop in export value was for edible fruit and nuts, which nosedived 73.5%.

Trade with smaller and more distant countries in the EU has been affected the most, while trade with larger and closer countries has been affected the least.

However, the authors say a small number of sectors have proven resilient, especially in terms of exports to bigger EU economies such as Germany and France.

The tobacco, railway and aircraft sectors saw increases in the variety of exports to EU nations.

A government spokesperson said it will “work to improve our trade and investment relationship with the EU and tear down unnecessary trade barriers, while recognising that there will be no return to the single market, customs union or freedom of movement”.

The BBC understands that in recent meetings with government, business representatives were invited to contribute early ideas on “resetting” the trade relationship with the EU, with a focus on “economic security”.

Progress is unlikely until next year, when the new European Commission is firmly established, and the UK has itself completed new industrial and trade strategies.