EU-UK Trade Exports Drop 27% Since 2021

The negative impacts of the UK-EU Trade and Cooperation Agreement (TCA) in post-BREXIT period have intensified over time, an analysis by researchers at the Centre for Business Prosperity at the UK’s Aston University revealed.

The new report entitled “Unbound: UK Trade Post BREXIT,” also showed a 33% reduction in the variety of goods exported, with the agricultural, textiles, clothing and materials sectors most affected.

To assess the impact of the UK-EU TCA, the report’s lead author Prof Jun Du analysed monthly imports and exports between the UK and the EU, from January 2017 to December 2023 and separated into pre- and post-January 2021 when the agreement came into force. The monthly data shows a 27% drop in UK exports and a 32% decline in imports from the EU.

Prof Du said that the TCA introduced substantial barriers and there are ongoing and marked declines in the value and variety of the UK exports and imports. Without urgent policy interventions, the UK’s economic position and place in the global market will continue to weaken, he felt.

The UK-EU TCA redefined trade and investment rules and market access between the UK and the EU. Since it came into force, the UK government has negotiated several trade agreements, but the EU remains the UK’s largest trade partner.

Exports for most sectors have decreased since January 2021, although the impact is varied. Agri-food, textile and clothing and material-based manufacturing have been among the hardest hit, with substantial declines in both export value and the variety of products exported.

At the same time, some sectors such as tobacco, railway and aircraft manufacturing have seen modest increases in varieties of products exported, the study found.

On the import side, most sectors have shrunk in both value and variety, particularly agri-food products, optical, textile and material-based manufacturing. A few sectors, for example, ships and furniture, have demonstrated noticeable increases in import product variety. 

Impact On UK-EU Trade

The large variations across different goods categories and EU trade partners underscore the uneven effects of BREXIT and the TCA on UK-EU trade dynamics, highlighting the need to understand the nuances and come up with tailored strategies that address the unique challenges of each sector within the new regulatory environment.

Dr Oleksandr Shepotylo, the report’s co-author said that their findings indicate a decoupling of the UK from key EU final goods markets, accompanied by a shift in the UK supply chains toward geographically closer EU trading partners for exports and smaller countries for imports.

“This shift raises concerns and underscores the urgent need for a strategic reconfiguration of UK supply chains to maintain competitiveness,” Dr Shepotylo added.

Professor Du said that The TCA has introduced considerable barriers to UK-EU trade, particularly through increased Non-tariff measures (NTMs).

“Addressing these issues through targeted improvements to the TCA is crucial to ensuring that UK businesses remain competitive in the European market. A structured, multi-faceted approach is necessary,” Prof Du added.