Almost every sector of the economy has been hit by Brexit, according to a new analysis which warns that some of the proposals for closer ties with the European Union would do little to repair the damage.
Researchers at the Centre for European Reform think tank found exports of chemicals and pharmaceuticals have fallen by 21 per cent since the UK left the EU, while those classed as ‘agrifood’ are down 29 per cent.
The report argues that many of the economic costs of Brexit stem from Britain’s departure from the bloc’s single market, suggesting recent calls for a new customs union with the EU would have only a limited impact.
Almost ten years on from the Brexit vote, the experts urge politicians not to risk repeating the mistakes of that era by pursuing “options that are either unavailable on the terms they envisage, or… unlikely to contribute meaningfully to economic growth”.
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The findings come amid a growing debate over what the UK’s relationship with the EU should look like.
While calls for a customs union have gained support among some politicians and business groups, the researchers argue that rejoining the single market would do more to boost trade and economic growth.
Such a move, however, would likely involve a return to freedom of movement and substantial contributions to the EU’s Budget – both of which would be politically fraught.
But the scale of the challenge is laid bare in the report, which found that Brexit “has reduced trade in nearly every sector of the UK economy”.
When it comes to services, for example, the travel industry is down 39 per cent, while financial services exports have fallen 24 per cent.
Total UK exports to the EU have fallen by about 12 per cent and total imports by about 16 per cent. And, overall, the losses amount to a reduction in Britain’s world-wide exports of 5 per cent and imports of 8 per cent.
Both of Keir Starmer’s main rivals Andy Burnham and Wes Streeting have said they want the UK to rejoin the EU one day.
Before then, however, discussions about what a much closer relationship would look like are “happening behind closed doors”, the authors of the report John Springford and Anton Spisak said.
They identify three main options for stronger links – a customs union, rejoining the single market in goods or returning to the single market in full.
The appeal of a customs union is that it would reduce barriers to trade in goods without requiring freedom of movement, they suggest.
However, the report warns the economic benefits would be limited.
The Treasury has been approached for comment.
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