Recent research from the London School of Economics suggests that Brexit has had a lesser impact on UK trade than previously anticipated. This is largely due to larger companies adapting to the new red tape at the border.
According to the study, UK worldwide goods exports and imports decreased by 6.4% and 3.1% respectively between 2020 and 2022, compared to the levels that were predicted if the UK had remained in the EU. The analysis was based on company-level trading data from HM Revenue & Customs for the first two years post-Brexit.
The report found that while the EU-UK Trade and Cooperation Agreement signed in 2020 did lead to a decrease in trade, the decline was not as severe as initially forecasted. The drop in trade resulted in a £27 billion hit to exports and £20 billion lower imports in 2022.
Despite larger businesses showing more resilience, smaller companies were significantly impacted, with over 16,400 businesses ceasing exports to the EU after 2021. The overall reduction in goods exports by 6.4% was noted as significant by Thomas Sampson, co-author of the report.
While the findings are limited to goods trade, they contribute to the ongoing debate on the economic repercussions of Brexit. Other studies, such as those from Aston University, have estimated larger negative impacts on exports and imports to the EU.
Looking ahead, the effects of Brexit will depend on the long-term implications of the Trade and Cooperation Agreement, which are yet to fully materialize. The government has implemented various measures to support smaller businesses amidst the changing trade landscape post-Brexit.