Brexit: many trade flows interrupted between the UK and the EU

The Brexit has caused a "major disruption" to trade between the UK and the European Union. At least, that's what a recent study reveals. While stable since 2013, the number of flows to the EU fell sharply in 2021.

UK SMEs discouraged by new red tape

In December 2020, the UK and the EU signed a new "trade and cooperation" agreement establishing preferential regimes in areas such as trade in goods and services, digital trade, public procurement, transport and energy. But this has not been enough to keep British small businesses exporting, particularly to Europe.

While the Brexit was supposed to free them up, they have been faced with additional burdens. In line with the timetable set out by the British authorities, full customs declarations, several checks and the requirement for prior notification of sanitary and phytosanitary imports have been phased in since the beginning of the year.

A report published in February 2022 by the Public Accounts Committee, the commission responsible for overseeing public spending, notes that the UK's exit from the EU combined with the Covid-19 pandemic has had an impact on declining trade. It points out that total trade in goods between the UK and the EU was 25% lower in Q1 2021 and 15% lower in Q2 2021 compared with the same periods in 2018.

These figures have been supplemented by a new study from the London School of Economics, according to which the number of flows to the EU will fall sharply in 2021, while the curve for flows to the rest of the world has remained relatively stable over this period.

" Some markets have simply ground to a halt," reports Thomas Samson, Professor at the London School of Economics.

A clear impact on the British economy

The study carried out by the London School of Economics reveals that the Brexit has had a clear impact on the British economy, and more specifically on exports to the EU.

While the sudden shock to exports recorded in January 2021 was seen as a catch-up following the stockpiling movement observed after the Brexit, Thomas Samson explains that the study identified " clear signals that exporters were affected ", but " this was not apparent in the aggregate data ".

While the Brexit has had a heavy impact on UK exports, the effect on imports is all the more visible compared to the rest of the world. This is mainly due to the fact that some European companies consider the UK market too expensive and have decided to withdraw. At the same time, British companies feel that European products have lost competitiveness since the introduction of customs formalities. These new measures may have prompted British SMEs to turn to other, cheaper suppliers.