A new assessment of Britain’s trade losses since Brexit underlines the severity of the economic challenge facing the successor to Liz Truss. This calls for candour rather than bluster as the Conservatives weigh their options between likely candidates Rishi Sunak, Boris Johnson and Penny Mordaunt. But there has been little enough of that in the endless Tory drama.
Six long years of chaos since the fateful vote to take the UK out of the EU, Brexit remains the defining schism in British politics. For all the argument, one thing is clear: the promised economic dividend remains elusive. On the contrary, as the Economic & Social Research Institute notes in the new study, trade flows between the UK and EU are down sharply on levels they might have reached if there was no Brexit. Because it is easier to trade with near neighbours, the proximity to European partners means this is a lost opportunity that cannot readily be overcome by trading further afield.
The ESRI findings point to a 16 per cent reduction in UK to EU goods trade and a 20 per cent reduction in trade from the EU to the UK, relative to a non-Brexit situation.Trade in goods between the EU and UK recovered after sharp declines in early 2021 but at rates “well below” what would have been expected.
There is little in Westminster debate to recognise Brexit constraints on the economy, with problems conveniently attributed to Covid-19, supply chain issues and the energy crisis triggered by the Ukraine war. But the brutal market backlash against the botched “mini-budget” demonstrates that the blithest economic fallacies have a limit, an important lesson that ardent Brexiteers would do well to recognise.
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Ireland “stands out” as having experienced a large reduction in UK imports. Yet Brexit had “no notable impact” on Irish exports to the UK, a good thing as far it goes. The question now is whether the incoming UK leader can stabilise the economy after the Truss whirlwind. That would be greatly in Ireland’s interest.