This report documents the decrease in imports and shows how the patterns of imports vary across sectors following the UK’s departure from the Single Market and Customs Unit at the end of 2020. The authors, Jan David Bakker, Nikhil Datta, Josh De Lyon, Luisa Opitz, and Dilan Yang, focus on comparisons between imports from the EU and imports from non-EU countries. Some products, such as fats, oils, and waxes, experienced a sizeable decrease in trade volumes with EU countries compared to those of non-EU countries in January 2021.
Other products, such as minerals, experienced minimal deviation in imports from the EU versus non-EU. We also document that the timing of import changes varies across products: in some cases, the deviation occurs pre-TCA, and there is some evidence of stockpiling; in other cases, the changes only occur post-TCA, and can be either short term or persistent.
The fall in imports from the EU will affect the UK economy through its impact on supply chains. Two-thirds of international trade is in products used as inputs to production. We show that imports from the EU fell for products that are used as inputs to production in many industries in the UK. For some sectors such as agriculture, fishing, and car manufacturing, there is evidence that imported inputs began to be sourced from non-EU countries pre-TCA. For others, including vegetable oil, animal fats, prepared animal feeds, and pharmaceuticals, the adjustments occurred post-TCA. Evidence suggests that increased access to intermediate inputs can boost productivity, so a reversal is likely to cause a fall in productivity.
Imports also provide cheaper goods to consumers, as well as a wider variety of choice. Focussing on food products, we show that the drop in imports after Brexit caused an increase in prices. Products that were more heavily reliant on imports from the EU increased in price following the election of Boris Johnson in 2019, pre-TCA and then increased further post-TCA.
This report therefore shows that changes in imports of goods from the EU have affected UK firms’ supply chains. Part of this change is driven by the adjustment costs incurred as part of the new trading relationship and is likely to be short term, but another part is likely to reflect a long-term increase in the cost of inputs from the EU, which make up a sizable contribution of total imports. This could have a knock-on effect for consumers who will face higher prices, and for workers whose jobs will be affected by adjustments in the supply chain.
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FAQs
The United Kingdom's withdrawal from the European Union in 2020 brought about a number of complexities for businesses at the border, including new procedures, increased costs and compliance issues that all put additional pressure on supply chains.
What is the impact of Brexit on the UK economy? ›
The average Briton was nearly £2,000 worse off in 2023, while the average Londoner was nearly £3,400 worse off last year as a result of Brexit, the report reveals. * It also calculates that there are nearly two million fewer jobs overall in the UK due to Brexit – with almost 300,000 fewer jobs in the capital alone.
How has Brexit affected UK imports? ›
By the end of 2023, goods trade had shrunk to levels not seen since 2015. This isn't just part of a general slowing of goods trade around the world – the UK's goods exports and imports have contracted by 13.2 per cent and 7.4 per cent since 2019, by far more than any other G7 country.
What effect will Brexit have on consumers? ›
Leaving the European Union (EU) added an average of £210 to household food bills over the two years to the end of 2021, costing UK consumers a total of £5.8 billion, new research from the Centre for Economic Performance (CEP) at the London School of Economics finds.
What is the problem with the supply chain in the UK? ›
What is causing supply chain problems? The causes of supply chain disruptions in the UK are complex. Labour shortages, Brexit trade barriers, global supply problems and panic buying have all contributed.
What are the problems with the supply chain in Europe? ›
From labour shortages to inflation, extreme weather events and ongoing geopolitical changes, the EU is navigating a plethora of issues, and so are the businesses that rely on its supply chain.
What are the positive effects of Brexit on UK businesses? ›
After Brexit, the UK is less restricted by some EU regulations. It is argued that a positive result of Brexit has been an ability to trade more freely with non-EU markets – for example, the US and Australia. The UK is putting in place new trade agreements with many non-EU countries around the world.
What are the benefits of the UK leaving the EU? ›
Leaving the EU has meant that the UK has not had to contribute to the significant new liabilities arising from the EU's Covid response including, for the first time, the EU's borrowing of up to €750 billion between 2021–24.
What is the Brexit summary? ›
Brexit (/ˈbrɛksɪt, ˈbrɛɡzɪt/; portmanteau of "British exit") was the withdrawal of the United Kingdom (UK) from the European Union (EU). Following a referendum on 23 June 2016, Brexit officially took place at 23:00 GMT on 31 January 2020 (00:00 1 February 2020 CET).
What is the effect of Brexit on UK and EU? ›
After Brexit, the EU becomes UK's biggest trading partner, and the UK becomes EU's third biggest trading partner after the United States and China. Some member states, notably Belgium, Cyprus, Ireland, Germany and the Netherlands, are more exposed to a Brexit-induced economic shock.
Since the UK left the EU in 2020, its goods exports to the EU have not performed any worse than to the rest of the world, and its services exports have grown strongly. How come? Headline UK trade numbers have been surprisingly robust after Brexit.
What factors affected Brexit? ›
Factors included sovereignty, immigration, the economy and anti-establishment politics, amongst various other influences. The result of the referendum was that 51.8% of the votes were in favour of leaving the European Union.
Did 80 of UK businesses say Brexit caused the biggest supply chain disruption in the last 12 months? ›
London, UK, 28th November, 2022.
Research from Ivalua, a leading global spend management cloud provider, has revealed that 80% of UK businesses say that Brexit has been the biggest disrupter to supply chains in the last 12 months, while 83% fear the biggest disruption from Brexit is yet to come.
How has Brexit impacted the UK export industry? ›
We also consider results with and without mineral fuels. Based on the aggregate estimates, exports to the EU since January 2021 are 22.9% lower on average, while exports to ROW are 11.3% lower as a result of TCA. Imports from the EU are on average 13.1% lower, and imports from ROW have barely changed.
