The Economic and Social Research Institute (ESRI) published a new report on 19 October, finding reductions in UK-to-EU goods trade by 16%.

The Economic and Social Research Institute (ESRI) published a new report on 19 October, finding reductions in UK to EU goods trade by 16%, and trade from the EU to UK reduced by 20%, relative to the scenario in which Brexit had not occurred. The report, titled How has Brexit changed EU-UK trade flows?, can be found here.

The brief summary states:

“The comparison scenario is that trade with the UK should have been expected to grow at a similar pace to that of the same products being traded with other EU partner countries around the world. Although goods trade between the EU and UK recovered most of its previous level in value terms following the sharp fall in the early months of 2021, this recovery leaves it well below the levels that would have been expected if it had performed on a comparable level with other trade partners.”

It notes that the research findings indicate that measuring the impact of Brexit on UK-EU trade can give varied results depending on the data source and comparison group used. The ESRI report used granular high-frequency product-level data on trade flows in goods across EU member states and the UK to estimate the effect from the exit date (1st January 2021) on the levels and composition of trade throughout 2021. “To isolate the impact of Brexit, a comprehensive set of product-time and product-partner fixed effects are applied to control for other changes in trade patterns, most specifically the changes in trade flows as a result of the COVID-19 pandemic,” the introduction reads.

The brief also states that global export goods from the UK have been growing slowly, therefore the impact of Brexit on EU-UK trade does not appear as large when comparing UK trade to the rest of the world as it does when comparing it to the faster-growing performance of EU trade. It then goes on to say that Ireland stands out as having had a significantly large reduction in imports from the UK relative to its other trade partners, whereas exports from Ireland to the UK continue to perform in line with other markets. The change, as a percentage, of imports from the UK to Ireland was -40%. It considers that increased trade between Ireland and Northern Ireland may play a role in the outcomes. 

“While our results highlight the importance of the appropriate comparison group in assessing the impact of Brexit, this leaves open for future research the question of whether the patterns of relatively slow UK export growth to the rest of the world and more rapid import growth can themselves be attributed a Brexit effect, perhaps via changing supply chains.”

Other significant changes were Malta (-59%), Croatia (-49%) and Cyprus (-47%).

(Sources: Economic and Social Research Institute, The Guardian