Brexit is ‘stifling’ Britain’s trade with Europe and the problem is getting worse

By Hanna Ziady, CNN

London (CNN) — Brexit is having “profound and ongoing stifling effects” on goods trade between the United Kingdom and the European Union, according to a new report that adds to evidence of the economic damage wrought by Britain’s exit from the world’s largest trading bloc.

Researchers at Aston University in England estimated that between 2021 and 2023, annual UK exports of goods to the EU were 17% lower than they would have been had Brexit never happened. Exports in most sectors have decreased since 2021, according to the report.

“The study highlights that the negative impacts of (Brexit) have intensified over time, with 2023 showing more pronounced trade declines than previous years,” the researchers wrote in the paper published Tuesday.

“This suggests that the transition in UK-EU trade relations post-Brexit is not merely a short-term disruption but reflects deeper structural changes likely to persist.”

Britain’s exit from the EU — following a divisive referendum in 2016 — was finalized on December 24, 2020, when the two sides finally agreed a trade deal.

The findings underscore the challenge Brexit poses to the Labour government’s ambitions to kickstart economic growth, its top priority since taking power following a national election in July.

UK Prime Minister Keir Starmer said this week that he would prioritize economic growth in the government’s upcoming budget, due to be unveiled next month, though he has ruled out rejoining the EU single market or customs union — measures that could help with that goal.

According to official figures, exports, split roughly equally between goods and services, make up almost a third of UK gross domestic product and the EU accounts for 48% of the country’s goods exports.

“The UK-EU trade relationship remains crucial for both parties,” Tuesday’s report said, adding that the relationship “underpins” economic stability and growth.

The report shows a steep reduction in the variety of British goods exported to the EU, with small businesses in industries such as food and clothing often among those abandoning exports due to increased costs and red tape.

According to the study’s lead author, Professor Jun Du, the post-Brexit trade deal has “introduced substantial barriers” to UK-EU trade.

To improve trade ties, the researchers recommend the government prioritize “sector-specific” agreements in areas such as agriculture, streamline customs procedures using digital technology and ensure closer regulatory alignment with the EU.

“Without urgent policy interventions, the UK’s economic position and place in the global market will continue to weaken,” Du said.

The report is the latest piece of research to highlight the negative effects Brexit has had on the UK economy. According to the UK in a Changing Europe think tank, between the 2016 referendum and July last year, Brexit had delivered an estimated hit to UK GDP of between 2% and 4%.

Over the long run, the new trading relationship is expected to reduce Britain’s output by 4% compared with what it would have been if the country had remained in the EU, according to the Office for Budget Responsibility, which produces economic forecasts for the government.

Sophie Hale, principal economist at the Resolution Foundation, a think tank, posted on X Tuesday that the Aston University research demonstrated “the economic case for a quick but ambitious UK-EU reset.”

A spokesperson for the UK government said: “We will work to improve our trade and investment relationship with the EU and tear down unnecessary trade barriers, while recognizing that there will be no return to the single market, customs union or freedom of movement.”

While goods exports to the EU have declined, exports of services to the bloc are at a record high, according to the government, hitting £172 billion ($227 billion) over the 12 months to March.

Olesya Dmitracova contributed to this article.

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