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England-Europe trade relations stumbled after Brexit

England-Europe trade relations stumbled after Brexit

New research has found that the post-Brexit trade agreement between Britain and the European Union has caused a “sharp decline” in Britain’s trade relations as bureaucratic practices at the border limit the ability to export.
Analysis of trade data shows that while UK exports to the EU have now returned to pre-epidemic levels, the number of buyer-seller relations has fallen by a third since the implementation of the EU-UK trade agreement in January 2021.
The findings of the Center for Economic Performance at the London School of Economics show that small businesses, with warnings from business groups, are finding it difficult to absorb tariffs, value-added taxes and bureaucratic practices, and to halt many exports altogether.
The London School of Economics team analyzed changes in trading patterns for the 1,200 individual product lines exchanged with the European Union.
The study finds that a return to pre-Brexit exports hides a sharp decline in the number of ‘commodities’ being exported, with the departure of ‘smaller’ species accounting for a lower share of total exports.
Thomas Sampson, associate professor of research at the London School of Economics and associate professor of economics, said the analysis revealed the hidden effects of the bureaucracy’s increased burden on small British exporters.
“Research has shown that the number of seller-buyer relations between the UK and the EU has dropped by a third since the trade agreement came into force, most of which were terminated in the first quarter,” Sampson said.
Research has found that there has been a sharp decline in the number of products sold in trade between British companies and their counterparts in smaller EU countries.
Thomas Fryer, co-author of the article and a PhD student at the University of Cambridge, described the decline as “significant”. “The UK seems to have stopped selling a lot of goods to smaller EU countries,” he added.
These research results are another worrying sign of the negative impact of the UK-EU Trade and Cooperation Agreement on British exporters.
Last month, the Office of Budget Responsibility, Government Expenditure Monitoring, warned that UK trade had “failed” the bulk of global trade and was lagging behind all other groups in the seven economies.
The Office for Budget Accounts estimates that total UK imports and exports will be 15 per cent lower in the medium term than Britain was part of the European Union, suggesting that Brexit may be “a factor” in the relatively poor performance.
Sampson says the findings of the London School of Economics raise questions about Brexit’s long – term impact on future EU trade. He added, “There is ample evidence that future growth in trade comes from small businesses today. Removing these export ties could lead to slower export growth in the future.”
William Payne, head of trade policy at the British Chambers of Commerce, said the findings of the study confirmed companies’ complaints that the trade and cooperation agreement had made them less competitive for more than a year.
He urged the government to work with the EU to reduce trade frictions: “Small businesses that do not have the money, time or resources to position themselves within the EU will certainly be severely affected. This is also important news.”
Martin McDougall, president of the Small Business Federation, said exporters were facing “numerous challenges”, including increased paperwork, and urged the government to launch a “small and medium enterprise support fund” to help companies trade internationally. “Small businesses should be at the heart of free trade agreements,” he added.
The Trade and Cooperation Agreement allows companies in the UK to trade “freely” with the EU, and through its “Export Support Service” is working to support exporters, according to the Department of International Trade.
A spokesman added: “We are committed to ensuring that businesses of all sizes receive the support they need to trade effectively with Europe and seize new opportunities when initiating trade deals around the world.”

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