According to research by the London School of Economics, Brexit has affected UK business less than many forecasters predicted, thanks to large companies adopting red tape at the border.
The researchers estimated that the UK's global exports and imports of goods fell by 6.4 and 3.1 per cent respectively between 2020 and 2022, compared with levels projected for the rest of the EU, for the first at company-level from HM Revenue and Customs. According to an analysis of business statistics of Two years later Brexit.
The report by economists at the LSE's Center for Economic Performance concluded that while the EU-UK trade and cooperation agreement signed in 2020 would "undoubtedly reduce trade", the decline would "at least in the short term, predict "Less than what the doers expected."
The fall in trade as a result of Brexit would equate to £27bn worth of exports and £20bn fewer imports in 2022, according to the LSE.
However, while larger businesses have proved more resilient, the report found, smaller companies were hit harder with more than 16,400 businesses leaving exports to the EU after 2021.
Thomas Sampson, co-author and associate professor of economics at the LSE, said that while the 6.4 per cent drop in overall goods exports was "not insignificant", it was still below many pre-Brexit studies. was smaller than predicted.
He added that the TCA was "a disaster for small exporters", with many ceasing to export to the EU, but "at the same time, large firms have adapted well to the new trade barriers".
The LSE findings, which are limited to goods trading, will add to the increasingly contentious debate on the economic impact of Brexit. The impact on UK trade was initially overshadowed by the Covid-19 pandemic, which caused massive disruption to global supply chains, and other mechanisms have modeled bigger hits.
Economists from Aston University Estimated Annual exports to the EU are 17 percent lower and imports 23 percent behind if Brexit had not happened, with the negative impact increasing through 2023.
In contrast the LSE report estimated a fall of only 13.2 percent in the value of goods exported to the EU as a result of using different modeling techniques and a smaller sample.
Jun Du, professor of economics at Aston University, said he thought the LSE numbers could be underestimated because the analysis focused on companies that were already strong enough to trade with the EU and the rest of the world. were
"These firms are survivors, so if you estimate the negative impact of Brexit from only good companies, you get a more rosy picture," he added.
The Office for Budget Responsibility still estimates that Brexit will not only reduce GDP by 4 percent in the long run as a result of the impact on trade, but also reduce investment and productivity in the UK economy.
On Trade, OBR forecastLast updated in May, is that total UK exports and imports of goods and services "will fall by 15 per cent in the long term". The OBR declined to comment on the LSE paper.
The LSE said that while there was "initial evidence" of companies adjusting to life outside the EU, the effects of Brexit would depend on the longer-term effects of the TCA which were "yet to be fully realised".
The trade is so-called warning The "Brexit 2.0" effectWith new EU regulations – for example a carbon border tax or new supply chain reporting requirements – making trade with the bloc increasingly difficult over time.
However, even allowing for these future effects, the LSE's Sampson said they would have to rise significantly to justify the OBR's forecast of a 15 per cent long-term impact on imports and exports.
Sampson added that while large businesses had initially adapted better than expected, that didn't mean they weren't facing higher costs and reduced productivity as a result of dealing with the new customs procedures. .
"Adjusting to new trade barriers creates additional costs for businesses, which are likely to be reflected in lower productivity," he added. "There is also a risk to future trade growth, because we know that yesterday's big exporters are today's small exporters, and they have obviously suffered."
The Cabinet Office said the government has taken a number of steps to help small businesses, including the Export Support Service which was launched in 2021. “We want to rebuild relationships with our European friends, tackle trade barriers and work for Brexit Britain. People,” added a spokesperson.