In recent months, a ubiquitous public narrative has emerged claiming that Brexit has been uniformly bad for UK trade. In particular, it has been alleged that Brexit is responsible for the fall of goods exports to the EU since 2019.
Because of the distorting effects of the Covid-19 pandemic and impact of the Ukraine war, it has been difficult to discern objectively what the real tends in UK export performance have been, much less what have been the underlying drivers. However, with the publication of full-year 2022 trade data by the Office for National Statistics (ONS) in February 2023, this was expected to change.
In the event, drawing conclusions from this data proved difficult because of the combined distortions caused by rampant inflation, changes with energy supply chains, and effects of UK Government policy. Many commentators have drawn erroneous conclusions as a result of relying solely on aggregate trade data.
One way around this challenge is to step away from headline trade numbers and analyse the UK’s goods exports, sector by sector. This reveals a very different picture to the negative Brexit consensus proclaimed in late 2022.
A thorough sectoral analysis of the new trade data plus an investigation into sectoral commercial activity, industrial trends, and international comparisons reveals five major conclusions:
1. The aggregate performance of goods exports to the EU has been much better than commonly believed and it is now clear that EU goods exports have recovered more quickly than goods exports to non-EU countries
2. There are multiple, different causes to UK’s current export underperformance — and Brexit is far from the most prominent
3. Brexit is not the prime driver of declines in UK goods exports: only 17 per cent of sectoral declines in goods exports to the EU in 2022 can be directly attributed to Brexit’s impact on UK-made goods
· 2022 trade data shows that non-EU goods exports are underperforming EU goods exports
4. The UK’s particular mix of goods exports explains why UK trade was bound to underperform G7 countries in 2021 and 2022
5. Commentators and analysts are concentrating on the wrong issues: fixating on Brexit’s trade impact obscures negative, long-term trends that inflict far greater damage on the UK’s export performance
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