Brexit Impact Tracker
Dr Gerhard Schnyder, Director of the Institute for International Management, has written a blog focussing on the impact of Brexit on the EU and UK Economies and Societies and Politics, entitled the Brexit Impact Tracker. Check it out below.
The good news first. On Tuesday the Office for National Statistics (ONS) published trade data for the second quarter of 2021 (April-June) and the figures show that trade with the EU is up on Q1 and now above pre-Brexit Q4 of 2020. The quarter-on-quarter increase in imports was 12.4%, the increase in exports 12.5%, the later almost entirely driven by increasing exports to the EU. So, was the Q1 slump in trade with the EU down to teething problems after all – as Brexiteers inevitably suggest every time post-Brexit economic figures show a positive trend (e.g. the Telegraph back in June)?
Comparing trade figures during a pandemic with ever changing rules about full and partial lockdowns and international travel restrictions is tricky and may mask Brexit effects. If we compare June 2021 figures to June 2018 for instance, the picture is less rosy than the quarter on quarter comparison: compared to June 2018 exports are 7.4% down, imports 2% (see table 2 here). So, the ‘good news’ about trade and the GDP growth rate of 4.8% will still be largely due to the bounce back following the easing of Covid19 restrictions, rather than to companies having adapted to Brexit and trading with EU countries like before. Indeed, the ‘teething problems hypothesis’ cannot explain away the fact that however much you invest into adapting to the post-Brexit trade world, the bottom line is that trade with the EU after Brexit is not frictionless anymore. That means higher costs for firms that some of them will not be able to afford. Despite the seemingly positive trade figures, there is mounting evidence that this situation starts hitting UK companies hard.
A stark reminder of this fact came from a widely-reported letter by James Ramsbotham, Chief Executive of the North East England Chamber of Commerce, which was sent to the Prime Minister in July, but picked up in the press this week. The letter draws a very bleak picture of the impact of Brexit on trade by companies in the North East of England: 75% of the nearly 2,500 member firms stated that the UK-EU Trade and Cooperation Agreement (TCA) had negatively impacted their business and 37.5% of respondents reported a drop in their UK-EU trade. Ramsbotham puts it bluntly:
“Many of these challenges are not ‘teething problems’ but are fundamental and permanent changes to the way that our businesses trade with Europe. Businesses have reported to us that they are struggling to absorb new costs that Brexit has presented to them and, for many, this is not possible. The result of this is that their prices will be forced upwards, making them fundamentally less competitive than their European competitors.”
To read the full article, please visit Dr Gerhard Schnyder’s website, here.
We would like to thank Dr Gerhard Schnyder for sharing this blog.
To find out more about our Institute for International Management, please visit this web page.
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