Britain's trade with Europe is being 'restricted' due to Brexit, and the situation is progressively deteriorating.
The study conducted at Aston University in the UK reveals that from 2021 to 2023, annual exports of goods towards the EU decreased by 17% compared to the scenario without Brexit. The report indicates that export levels have fallen in most industries since 2021.
The researchers noted in their paper, published on Tuesday, that the adverse effects of Brexit have intensified over time, with 2023 showing greater trade declines compared to earlier years. This suggests that the post-Brexit transformation in UK-EU trade relationships extends beyond a short-term disruption and is more related to long-term structural changes.
Britain's departure from the EU, following a contentious referendum in 2016, was finalized on December 24, 2020, when both sides eventually agreed on a trade deal.
The findings underscore the challenge Brexit poses to the Labour government's mission to stimulate economic growth, which has been their primary focus since taking power after a national election in July.
Prime Minister Keir Starmer stated this week that boosting economic growth would be a top priority in the government's upcoming budget, due to be announced next month, however, he has ruled out rejoining the EU single market or customs union — measures that could help achieve this goal.
According to official statistics, exports, which account for approximately a third of UK gross domestic product, are equally split between goods and services, while the EU represents 48% of the country's goods exports.
The report asserts that the UK-EU trade relationship is crucial for both parties, contributing to economic stability and growth.
The report shows a significant reduction in the variety of British goods exported to the EU, with smaller businesses in sectors such as food and clothing often withdrawing from exports due to increased costs and bureaucracy.
Professor Jun Du, the study's lead author, suggests that the post-Brexit trade deal has introduced substantial barriers to UK-EU trade.
To enhance trade relations, the researchers suggest the government prioritize "sector-specific" agreements in areas such as agriculture, streamline customs procedures using digital technology and ensure closer regulatory alignment with the EU.
Du stated, "Without immediate policy actions, the UK’s economic position and global market position will continue to deteriorate."
The report is the most recent research to highlight the adverse impact Brexit has had on the UK economy. According to the UK in a Changing Europe think tank, between the 2016 referendum and July last year, Brexit resulted in an estimated GDP loss of between 2% and 4% for the UK.
Over the long term, the new trading relationship is expected to reduce Britain's output by 4% compared to what it would have been if the country had remained in the EU, as per the Office for Budget Responsibility, which provides economic forecasts for the government.
Sophie Hale, principal economist at the Resolution Foundation, a think tank, wrote on Tuesday that the Aston University research emphasizes "the economic case for a swift but ambitious UK-EU reset."
A UK government spokesperson stated: "We will strive to enhance our trade and investment relationship with the EU and dismantle unnecessary trade barriers, while recognizing that there will be no return to the single market, customs union or freedom of movement."
While goods exports to the EU have decreased, exports of services to the bloc have reached a record high, according to the government, hitting £172 billion ($227 billion) over the 12 months to March.
Olesya Dmitracova contributed to this article.
The study warns that Brexit's negative effects on UK-EU trade relations could hinder the Labour government's efforts to boost business growth. The report recommends implementing sector-specific agreements and streamlining customs procedures to improve trade relations with the EU.
