Ten years on, Brexit’s economic impact is becoming clearer
Shortly after the UK left the EU in 2020, a Bristol-based firm called Eskimo began selling a new type of high-fashion and energy-efficient electric radiator, based on new technology developed by academics in the city.
They planned to send them all over Europe using the Channel Tunnel.
Given Europe’s green ambitions, this was a product that was produced just in time and the Birmingham factory was kept busy due to the flow of orders.
Boss Phil Ward told me his startup was continuing to grow, but in his view it could have been a lot more had it not been for what he called the “Long Brexit effect”: 40% of its exports were going to the European Union in 2020, and just 5% in 2025.
Post-Brexit, the deal reached with the EU by then-Prime Minister Boris Johnson in December 2020 guaranteed zero tariffs on exports to the EU, but Ward says despite this, the bureaucracy and paperwork not directly related to customs duties were enough to create the expectation of delays, costs and hassle for potential customers.
Eskimo managed to export some goods to agents in France but stopped direct sales to European consumers altogether. The planned expansion into Germany floundered.
As Eskimo discovered when it tried to export towel rails to Australia and New Zealand, both countries comply with international safety standards, which are heavily influenced by the EU’s CE marking.
This is important because one of the theoretical potential benefits of Brexit was that it would allow UK regulators to sidestep the EU’s safety regulations and adopt a more pro-innovation, less regulatory approach to high-tech inventions.
Eskimo’s experience is an example of a broader trend reflected in export figures. The UK Trade Policy Observatory at the University of Sussex has calculated a rapid 26% reduction in the UK’s different types of exports by 2023, while a new study from Aston University Business School, using five years of more detailed trade data, concludes a 53.8% loss in export types and a 31.5% loss in imports.
These figures for “commercial varieties” are reductions in the number of products shipped to different EU countries.
A decade ago, many economists argued that the UK leaving the EU would cause long-term economic damage, and many believed that this damage had occurred.
But to make that call you need to compare what happened with what might have happened if there had been no Brexit, and doing so is a matter of method and statistical judgment.
And that judgment must take into account the fact that the period since Brexit has been a period of major global change. The energy price shock caused by the pandemic that emerged in the spring of 2020, the war that began in Ukraine two years later, and more recently the conflict in Iran all need to be taken into account.
So too is the question of whether a Brexit-free UK could keep up with the tech boom in Silicon Valley in recent years to the same extent that Brexit Britain has.
The clear consensus among economists who made the calculations is that they took global turmoil into account when assessing the impact of Brexit. Others question their methods and the extent of Brexit’s impact.
Some of the most negative predictions in 2016 turned out to be overly pessimistic, including those that said the UK could suffer a Great Depression-style hit. Whatever the economic blow, it was not sudden enough to cause an immediate recession.
But those who believe Britain has suffered long-term economic damage by leaving the EU say the blow is no less profound.
