Fresh analysis from the London School of Economics reveals Brexit has inflicted a £27 billion blow to British trade during its initial two-year implementation period, though the overall economic impact appears less severe than originally forecast.
The comprehensive study, conducted by researchers at the Centre for Economic Performance, examined data from more than 100,000 companies, uncovering a 6.4% decline in British goods exports and a 3.1% reduction in imports by the end of 2022. These figures stand in stark contrast to the Office for Budget Responsibility’s earlier projection of a 15% trade decline.
Small enterprises bore the brunt of Brexit’s impact, with over 14,000 firms completely ceasing their EU trading operations. The trade barriers, whilst not including tariffs, introduced substantial bureaucratic hurdles including customs checks, documentation requirements, and complex rules-of-origin protocols.
Large organisations demonstrated remarkable resilience, maintaining steady trade levels with EU partners. These corporations successfully navigated the new regulatory landscape, often securing alternative supply chains outside the EU to maintain their import requirements.
The research marks the first detailed analysis using HMRC customs records, providing unprecedented insight into individual business relationships post-Brexit. The findings suggest that while immediate trade disruption occurred following Britain’s exit from the EU’s single market and customs union, larger firms’ adaptability helped moderate the overall economic impact.
The implications of these findings may influence upcoming Trade and Cooperation Agreement negotiations, scheduled for next year. Ministers face mounting pressure to reduce trade barriers while balancing domestic interests, particularly in agriculture and fishing sectors.
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