Brexit Deal Impact on UK-EU Trade; Markets Rally Before Interest Rate Decisions
The impact of the Brexit trade deal on UK-EU goods trade is becoming increasingly evident, with new reports showing a significant decline in trade between the two entities. According to a study conducted by academics at Aston Business School, the Trade and Cooperation Agreement (TCA) has led to a sharp fall in UK-EU goods trade, with exports and imports dropping by over a quarter.
The findings from the study reveal a substantial decrease in both UK exports and imports with the EU, highlighting the ongoing challenges posed by Brexit on the UK’s trade competitiveness. Between 2021 and 2023, monthly data indicates a 27% decline in UK exports and a 32% reduction in imports to and from the EU. This decline has been attributed to the non-tariff measures (NTMs) introduced by the TCA, such as checks on goods, which have disrupted the flow of trade.
The report also points out a significant reduction in the variety of goods traded between the UK and the EU, indicating that the UK is gradually disengaging from EU value chains. While there has been a notable decline in consumer goods exports to the EU, the UK remains reliant on the EU for intermediate and capital goods. The study suggests that these trade challenges are likely to persist and intensify over time, reflecting deeper structural changes in UK-EU trade relations post-Brexit.
One of the key issues identified in the report is the negative impact of the TCA on agriculture and food product exports, which have been particularly affected. The introduction of NTMs has created barriers that have hindered the smooth flow of trade, leading to disruptions in key sectors. Recent delays in implementing post-Brexit checks on fruit and vegetable imports from the EU further highlight the challenges faced by businesses due to the trade deal.
In light of these developments, urgent policy interventions are needed to address the declining trade volumes and variety of goods traded between the UK and the EU. Professor Jun Du of Aston University, the lead author of the study, emphasized the importance of taking action to prevent further weakening of the UK’s economic position in the global market.
As the UK grapples with the impact of the Brexit deal on trade, global markets are experiencing a rally ahead of key interest rate decisions. The US industrial output saw a significant rise last month, indicating a positive trend in the economy’s performance. Similarly, US retail sales beat forecasts, showing resilience in consumer spending despite economic uncertainties.
In the UK, the FTSE 100 share index reached a two-week closing high, reflecting optimism in the market. The rally in shares was supported by positive economic data, including a rise in US retail sales and manufacturing output. However, concerns remain about the impact of Brexit on UK-EU trade and the potential long-term consequences for the economy.
Subheadings:
Brexit Deal Impact on UK-EU Goods Trade
Challenges and Implications of the TCA
Market Rally and Economic Indicators
In conclusion, the repercussions of the Brexit trade deal on UK-EU trade are becoming more pronounced, with a sharp decline in trade volumes and the variety of goods traded. Despite market rallies and positive economic indicators, the ongoing challenges posed by the TCA highlight the need for urgent policy interventions to address the trade disruptions and safeguard the UK’s economic position in the global market.