Exports to EU to plunge by more than one-third because of Boris Johnson’s Brexit trade deal, study warns

Exports to the EU will plunge by more than one-third because of Boris Johnson’s hard Brexit trade deal, a new study predicts.

Total UK trade will nosedive by 13 per cent, according to the London School of Economics (LSE) analysis, making a mockery of the government’s claims of a buccaneering “Global Britain” outside the bloc.

And Britons will feel the pain in their wallets and purses, with income-per-head forecast to fall by 6 per cent – just 2 per cent less than if there had been a no-deal Brexit.

The study came as a cabinet minister rebuffed a call to assess the economic damage from the Christmas Eve agreement, telling MPs it was time to “move forward”.

Meanwhile, Michel Barnier, the EU’s Brexit negotiator, dismissed UK claims of “teething problems” affecting trade – warning of “obvious, inevitable consequences” of the choices made.

While some “glitches, problems and breakdowns” caused by the introduction of new paperwork might be cleared up in the coming weeks and months, other things have “changed for good” as a result of the UK’s decision to leave the EU, said Mr Barnier.

And he made clear that the UK will not be able to rewrite structural changes that have led to checks on agricultural exports and the confiscation of lorry drivers’ packed lunches, stating: “This agreement will not be renegotiated; it now needs to be implemented.”

As the impact of Brexit obstacles to trade began to make itself seen in the form of empty supermarket shelves in Northern Ireland, Stormont’s agriculture minister, Edwin Poots, warned that the province was facing a “major crisis” in its food supply because of the protocol signed by Mr Johnson.

“It was made very clear to us by the suppliers both to hospitals and schools that if the current arrangement for supermarkets isn’t extended in a few months’ time, they will not be able to supply our hospitals and schools with food,” Mr Poots told BBC Radio Ulster.

The new report by Thomas Sampson, associate professor of economics at LSE, found that the most important impact of Brexit on future trade arises from the UK leaving the EU single market and customs union, creating barriers to cross-Channel commerce.

“Goods trade costs will increase due to customs red tape, border delays, rules of origin requirements and the need for products to satisfy different regulations and standards in the UK than the EU,” Prof Sampson wrote in the paper for the UK in a Changing Europe think tank.

However, his study predicts even harsher effects on services industries, after the prime minister failed to secure agreement on access to the crucial EU market.

“For services, which accounted for around one-third of UK-EU trade in 2019, the increase in trade costs is likely to be even larger,” the paper warns.

“Financial firms no longer have passporting rights to serve EU clients, there is no guarantee of mutual recognition of professional qualifications, labour mobility is severely restricted, and firms will have to navigate a maze of country- and sector-specific regulations on service providers.”

Overall, the professor forecast a 36 per cent fall in exports to the EU over the next decade, a 30 per cent decline in imports, and for total UK trade to fall by 13 per cent.

Until New Year’s Day, the UK was shielded by the “standstill” transition period, but Prof Sampson said: “There is already evidence that Brexit has caused some firms to stop trading with the EU in anticipation of future changes in trade policy.”

He added: “It is likely that Brexit has only destroyed low-value trading relationships, while leaving the large firms that dominate aggregate trade unaffected. But there is no guarantee this will continue to be the case.”

And he warned that businesses reeling from the Covid-19 pandemic, with staff on furlough, “will have less capacity to deal with changes in trade barriers”.

However, in the House of Commons, Liz Truss rejected a call by Labour to publish the government’s own economic assessment of the trade deal.

The trade secretary urged Labour to “move forward”, despite having released assessments for much smaller “rolled over” deals with the likes of Moldova and North Macedonia.

The government came under fire in the Commons over the damage inflicted by the trade deal on the UK fishing industry, with Tory MPs including the party’s leader in Scotland speaking out about the “serious concerns and frustrations” of fishermen.

The Scottish Tory leader, Douglas Ross, said one skipper in his Moray constituency had seen the value of his catch fall to “half of what he needs to cover his costs”.

The Tory MP for St Austell and Newquay, Steve Double, said fishermen in Cornwall were “very disappointed” by the agreement and feared they would “benefit little” from it.

Other MPs complained of an “avalanche of paperwork” and “cumbersome red tape” faced by fisheries firms.

The Liberal Democrat MP for Orkney and Shetland, Alistair Carmichael, described the situation as “a shambles”.

“For years, this government has promised our fishing industry a sea of opportunity, but today our boats are tied up in harbour, their propellers fouled by red tape manufactured in Whitehall,” he said.

But the environment secretary, George Eustice, dismissed the difficulties faced by fishermen as “teething problems” and blamed some blockages on European bureaucrats.

“Many of these are quite trivial, about where the stamp is,” he told the Commons. “We’ve even had questions raised about the colour of the ink that is used on the forms, the pagination, the way pages are numbered and so forth.”

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