Remainers have jumped on comments by Rishi Sunak as evidence that leaving the European Union was economic folly.
“It was always inevitable that if you change the exact nature of your trading relationship with the EU that was going to have an impact on trade flows,” the Chancellor told MPs on Monday.
Sunak’s comments came after the Office for Budget Responsibility (OBR), the fiscal watchdog, said Britain “appears to have become a less trade-intensive economy” over recent years.
The OBR has stood by a previous prediction that Brexit will, eventually, knock 15pc off the value of trade to Britain’s economy.
Its analysts last week said: “These effects are likely to take several years to be fully realised, so with only just over a year having passed since the end of the transition period, and given the difficulty abstracting from the impact of the pandemic, we will continue to keep this assumption under review.”
Yet despite the UK’s overall trade dipping since leaving the EU, analysis reveals Britain’s exit is not necessarily to blame.
It is clear Britain has missed the boat on a post-Covid-19 boom in the volume of trade. Global exports sit at about 10pc above pre-pandemic levels, and about 5.5pc higher in advanced economies. In the UK, however, exports are still about 12pc lower.
What is less clear is the responsibility of Brexit in this differential, with the pandemic also playing a key role.
In the wake of the deal, exports to the EU rapidly recovered. In January 2021, after the deal was agreed, UK exports to the Continent plunged 44pc to £7.6bn, compared with a year earlier. This, however, bounced back to £12.8bn within two months, in line with late-2020 levels.
At the start of the lockdown, meanwhile, Britain’s export volumes plunged – by about 15pc in the three months to May, when the Brexit deal took effect.
