Brexit is getting worse

Aston University’s Business School has been working hard and crunching the numbers and its conclusions are stark – Brexit is getting worse.

Three years after the signing of the Trade and Cooperation Agreement (TCA), the report shows that there has been a sharp decline in UK exports and imports with the EU. Between 2021 and 2023, monthly exports to the EU were down by 27% and imports down by 32% compared with what would have been expected to happen if we had stayed in the bloc.

Annual data which smooths out the monthly fluctuations shows that the figures are still huge – exports down 17% and imports 23% lower.

The figures also show a 33% reduction in the variety of goods exported, which suggest that it is Britain’s small- and medium-sized firms which have stopped trading with the EU, a finding strongly supported by anecdotal evidence.

The study also finds that the impact of the TCA is intensifying with time. We are not “getting used to it” or “finding ways to cope”, we are just falling out of the EU wide supply chain and the consequences are dire and getting worse.

As this report finds, there was a “noticeable worsening of EU-UK trade in 2023”. The report also found that different sectors were hit differently with agriculture and food suffering the most, and trade with smaller and more distant EU countries falling further than trade with larger, closer nations.

All of this bad news makes sense. Large international giants can afford the red tape better, can handle the form-filling and checks more easily and have a larger volume of sales across which to spread the costs. For SMEs (small and medium enterprises) the result of Brexit has been much, much worse.

They cannot afford more staff to push pens, they cannot afford to re-label their small export sales, they cannot afford the checks when none are necessary on domestic sales. So, they just stop exporting.

The government has responded by saying that it will “work to improve our trade and investment relationship with the EU and tear down unnecessary trade barriers, while recognising that there will be no return to the single market, customs union or freedom of movement”.

Which is frankly the same as throwing in the towel. This report talks about new supply chains, government help for SMEs, reshoring and so on, but there are really no total solution to the complete mess that has been created by leaving the EU. Work-arounds, slightly less red tape or slightly fewer checks are not the answer.

Brexit has successfully placed huge and insurmountable barriers to the exports and imports of SMEs, which means less trade, less variety, less competition, higher prices.

And for a government which is basing its whole strategy on higher growth, it means lower growth too.

The only answer is to rejoin the single narket – you know, the one which the Brexit campaigners promised no one was talking about leaving. Everything else is just rearranging deckchairs on the Titanic.