Doomsday predictions of a post-Brexit collapse in trade have “failed to materialise” according to a leading Westminster think tank.
A report by the National Institute of Economic and Social Research (Niesr) said there had been a “significant improvement” in the UK’s net trade performance with the EU since the referendum nearly six years ago.
Paul Mortimer-Lee, the report’s author and a deputy director at Niesr, said: “This raises the question of whether analysts have been looking in the right place when searching for economic losses owing to Brexit.”
Mr Mortimer-Lee said the UK should eventually reach a “stable” trade deficit with the EU, with the net difference between exports and imports likely to settle at a third of its pre-referendum levels.
He said the gap between the latest figures and the pre-referendum trend was equivalent to 2pc of GDP, suggesting that the economic damage dealt by Brexit could be lower than the 4pc expected by the Office for Budget Responsibility.
He added that a fall in the value of the pound had “transferred the negative Brexit shock away” from exporters, who instead benefitted from being able to sell goods more competitively.
UK–EU trade suffered a temporary hit at the start of 2021 after customs rules took effect. Exports quickly returned to regular levels, but imports have been slower to recover.
Mr Mortimer-Lee said the best way for ministers to support British exports was to “improve competition policy, rather radically”.
He said the Government should act to “remove red tape” and cut other costs on consumers and businesses, as well as create freeports to make certain industries more competitive without driving prices up elsewhere.
