UK-EU trade relationships tumble after Brexit

UK-EU trade relationships tumble after Brexit

The UK’s post-Brexit trade deal with the EU has caused a “steep decline” in the number of trading relationships Britain has with the bloc as red tape at the border curbs the ability of smaller firms to export, new research has found.

Although UK exports to the EU have now recovered to pre-pandemic levels, analysis of trading data shows the number of relationships between buyers and sellers tumbled by a third after the introduction of the EU-UK trade deal in January 2021.

The findings from the LSE Centre for Economic Performance chime with warnings from business groups that smaller firms have struggled to absorb customs controls, VAT and regulatory red tape, with many quitting exporting altogether.

The LSE team analysed changes in trade patterns for 1,200 individual product lines traded with the EU, in what they said was the most comprehensive study to date of the effects of Brexit on UK-EU trade.

The paper found the return to pre-Brexit levels of exports to the EU “masks a steep decline in the number of varieties [of goods] exported, driven by the exit of ‘small’ varieties that account for a low share of total exports.” 

Thomas Sampson, co-author and associate professor of economics at LSE, said the