Brexit has cut trade in almost every sector of the UK economy, study warns

Almost every sector of the economy has been affected by Brexit, according to a new analysis that warns some proposals for closer ties with the European Union will do little to repair the damage.

Researchers at the Center for European Reform think tank found that exports of chemicals and pharmaceuticals have fallen by 21 per cent since Britain left the EU, while those classified as “agri-food” have fallen by 29 per cent.

The report argues that most of the economic costs of Brexit come from Britain leaving the bloc’s single market, and suggests that recent calls for a new customs union with the EU will have only a limited impact.

Almost 10 years after the Brexit vote, experts are warning politicians not to risk repeating the mistakes of that period by pursuing “options that either do not exist on the terms they envisaged or are unlikely to contribute meaningfully to economic growth”.

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The findings come amid a growing debate about what Britain’s relationship with the EU should be like.

Calls for a customs union have gained support among some politicians and business groups, while researchers argue that rejoining the single market would further boost trade and economic growth.

However, such a move would likely involve a return to freedom of movement and significant contributions to the EU Budget, both of which would be politically worrying.

But the extent of the problem is made clear in the report, which finds that Brexit has “reduced trade in almost every sector of the UK economy”.

For example, when it comes to services, the travel sector experienced a 39 percent decline, while financial services exports fell 24 percent.

Britain’s total exports to the EU fell by approximately 12 percent and total imports by approximately 16 percent. Overall, the losses amount to a 5 per cent reduction in Britain’s worldwide exports and an 8 per cent reduction in imports.

Keir Starmer’s main rivals Andy Burnham and Wes Streeting have said they want the UK to rejoin the EU one day.

But the report’s authors, John Springford and Anton Spisak, said that before that, discussions about what a much closer relationship would look like “took place behind closed doors”.

They identify three main options for stronger links: a customs union, rejoining the single market for goods, or a full return to the single market.

Experts argue that the appeal of a customs union is that it would reduce barriers to trade in goods without requiring freedom of movement.

But the report warns that economic benefits will be limited.

The Treasury was contacted to get an opinion on the issue.

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