Britain’s performance is labelled “a disaster” as EU red tape affects trade
According to an analysis by trade experts, Britain’s exports of goods are trailing all G7 countries.
The Office for National Statistics published quarterly figures in March. They showed that the UK export volumes were 9 percent below the 2019 average.
The Bank of England, UK’s fiscal watchdog, has done an analysis of the country’s exports and found that they may be even more weaker. The OBR predicts that this underperformance will persist for the next two-years.
Sophie Hale, a trade economist at Resolution Foundation think-tank described the UK’s performance in the current economic climate as “a disaster”. She said that the UK’s performance was a disaster because of the drop in goods export volume.
According to ONS, the UK has the worst export performance of the G7. This compares with double-digit growths in Italian and Japanese trades, 4% growth in the US, and 2% for Germany.
These findings are coming as IMF predicted UK’s economy would have the worst performance in the G7 in 2023. It contracted by 0.3%.
Business leaders claim that the UK has been left behind by red tape and other post Brexit obstacles to trade with the EU. Not enough has been done about the problem.
Emma Rowland (trade policy advisor at the Institute of Directors), a prominent business group, stated that UK exports were “sluggish” after the opening of the economy following the coronavirus lockdowns.
She said, “It is evident that Brexit has had a greatest influence on businesses’ exporting strategies. It has created barriers to trade as well as increased competition from EU firms.”
Multiple factors have made it more difficult to use trade data from recent years in order to evaluate the impact of Brexit.
The strong growth in precious metals trade, Hale stated, inflated UK’s export data last year. This Hale claimed offers “little economic value”. The ONS practice dictates that precious metal trading is not included in the analysis. The G7 countries that aren’t large buyers of precious metals don’t have the same trading volume.
These figures were further complicated by discontinuities when collecting trade data with EU since 2021, and double counting of imports in 2022’s first half.
Hale stated that the numbers were not so murky as to make it impossible to conclude and that it was still possible to see a clear Brexit effect in trade data. She said that the country’s trade performance could also be affected by disruptions to supply chains, low business sentiment, and stagnation in business investments since Brexit.
The BoE modified the official data earlier this year by allowing double counting and discontinuities. The BoE concluded that trade volumes were “weaker” than was implied by official data since January 2021.
The central bank stated that “These adjusted trade numbers are also weaker then previously anticipated, suggesting that the impact of Brexit on trade has occurred somewhat faster than previously thought.”
The OBR conducted a similar exercise last month and found that overall trade volumes were 3.4% lower than the ONS figures.
OBR’s report showed that UK trade overall was lower than other industrialized countries, despite services being half of total exports. However, they performed better than goods. The UK’s services export volumes increased by 2.4% in the three months to 2022, compared with their 2019 levels.
OBR predicts that the UK’s overall trade will continue to decline over the next two-years, with export volumes expected to drop by 6.6% in 2023 and 0.3% in 2024.
It stated that “weak growth in exports and imports over the medium-term partly reflects Brexit’s continuing impact, which we expect will reduce the overall trade intensity in the UK economy by 15% in the long-term.”