Preliminary imports and exports data for the first month in which the UK traded with the EU on new terms following the end of the Brexit transition period has confirmed that post-Brexit trade has indeed suffered a steep decline.
For example, the goods imports from the UK to Germany shrank by €2bn in January compared with the same month in 2020 to just €1.6bn. This is a 56.2 per cent plunge in sales and exports. The plunge for products moving in the other direction was around 29 percent.
It is becoming more and more clear that companies are not adjusting to the red tape and non tariff-barriers. Disruptions may be down to a somewhat lower demand due to national lockdowns, however lower product exports are also undeniably due to disruptions as firms got to grips with the new paperwork and processes.
It is being predicted that the UK economy will suffer a lot more from the effects of Brexit than that of the EU. Experts say, UK's GDP will be down 2.25% by the end of 2022 compared to a situation of continued membership. The EU's hit in relation to its GDP is estimated to be only about 0.5% for the same time period.
Although the Free Trade Agreement negotiated softens the blow for the economy, the impact for the UK will nonetheless be felt in a number of economies. The above number is equivalent to a loss of GBP 40 bn over two years.
The EU commission said the “trade shock” from the so-called non-tariff barriers resulting from Brexit amounted to the equivalent of a tax on imports worth 10.9% for the EU and 8.5% for the UK.
UK producers wanting to introduce products into the EU are facing substantial challenges and border disruption. A month after the implementation of new rules, the new rules are turning out to be the equivalent of non-tariff barriers. For some small and medium sized businesses these disruptions may prove to be existential.
Also, more problems are being expected in relation to the situation in Northern Ireland. The EU has ruled out a two year transition period on the Protocol as proposed by the UK government. Further, UK businesses are demanding changes for the services sector.
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