“Some of the negative effects of Brexit on economic performance and trade occurred even before Britain’s exit from the EU in 2020,” says Lisandra Flach, Director of the Ifo International Economic Center. “This was due to increased uncertainty among companies and the fact that they began to adapt to the new environment soon after the 2016 referendum.”
The UK’s share of EU-27 exports of goods fell from 7.1% in 2015 * to 6.2% in 2019 *. Its share of EU27 imports fell from 4.4% to 3.9% over the same period *. More trade was then diverted out of the UK as the pandemic progressed.
Although the Trade and Cooperation Agreement succeeded in avoiding higher tariffs, since January 2021, most products have had to cross at least one new barrier before they can cross the UK-EU border. Such barriers include, but are not limited to, inspection certificates and other documents and requirements that make border crossings more time consuming and complex, increasing trading costs. “These new barriers are devastating for businesses in the EU and the UK, and especially for small and medium-sized businesses,” Flach continues. “This is an even bigger problem in the midst of a pandemic, as this may make it difficult for companies to find alternative markets. SMEs in particular have less decentralized supply chains and the fixed costs of finding alternative trading partners may be too high for them.
* From January to November, as December 2021 figures have not yet been released. Intra-EU trade has also been taken into account in the calculation.
Source: ifo Institute
Source: The Nordic Page