Chancellor Rishi Sunak yesterday (28 March) told MPs that “it was always inevitable” that Brexit would affect Britain’s trade with the rest of the EU.
He was addressing the House of Commons Treasury Committee after a forecast from the Office for Budget Responsibility (OBR) revealed that UK trade with the EU will continue to be down 15% as a result of the country leaving the bloc.
Inevitable
Sunak agreed that a slump in trade “might well be” due to Brexit, the Independent reports.
“It was always inevitable that there would be a change in our trade intensity with Europe as a result of a change in the trading relationship. That was expected and unsurprising,” he said.
Tangled up
The Chancellor told the committee that it was too early to “disentangle” the effects of Brexit from the pandemic on Britain’s trading performance, however. He also said that trade with other parts of the world would open up.
“Trading relationships take time. They don’t happen overnight. So, I think that of course that will happen over a period of time,” he said.
More expensive
OBR chairman Richard Hughes said the assumption was that trade intensity with Europe would diminish after Brexit because “we have made it more expensive to trade with our single largest trading partner”.
Figures reported in the FT from the Netherlands Bureau for Economic Policy Analysis also found that the volume of UK goods exports to the Netherlands was 14% down in the three months to January, compared with the same period in 2020.
SME effect
As Covid restrictions lift, small businesses are facing an array of new restrictions when resuming work in Europe, the FT reports.
Russell Antram, the head of EU trade at the CBI, said the complexity of rules across 27 countries was “a real challenge for the largest of HR departments, let alone small businesses”.
He said the UK and individual EU member states had to make progress in bilateral talks to ease restrictions.
Services hit
William Bain, head of trade policy at the British Chambers of Commerce, said the EU-UK Trade and Cooperation Agreement (TCA) contained more than 1,000 restrictions on cross-border trade in services.
UK services trade with the EU is worth £121bn a year and £9.4bn is from companies with fewer than 50 employees.
Delays
Richard Lemin, managing director of engineering firm Infinity, said that with work permits taking eight weeks to clear it was hard to compete on short deadline jobs.
“The biggest risk to our future business relates to potentially losing our current EU clients because the work permit process across the EU is not clear or within our control,” he said.
Benefits of Brexit
Earlier this year the government published a report flagging the benefits of Brexit and what the country has achieved since leaving the EU.
It highlighted areas including:
- Establishing the UK’s own tariff regime via the UK Global Tariff
- Committing £180 million to creating a Single Trade Window
- Agreeing trade deals with 70 countries plus the EU
- Retaking the UK’s seat at the World Trade Organization
