The first tell- tale sign of the adverse impact of Brexit on UK’s economy comes in the form of battered trade flows.
As expected the negative impact would come as maiden barrages as the UK’s economy re-configures itself to the new trade environment following a painful and costly divorce from its biggest trading partner, the EU.
Needless to say that the Brexit has freed the UK from some of the draconian tariff shackles and that the economic freedom, thus, gained would enable her, in the long run to take her destiny into her hand and to embark on a path to speedy recovery, reclaiming her rightful position in the arena of international trade, politics and diplomacy.
Adverse effects on trade flows
According to https://www.thelondoneconomic.com, French exports to the UK has reduced to 13 percent in January in comparison to the average of the previous six months.
The first hard data since the implementation of Boris Johnson’s deal record a steep decline in trade activities between the UK and a large number of EU countries.
French imports from the UK has also recorded a sharp decline of 20 per cent, while French exports recorded a 13 percent reduction.
Significantly, these figures have a sharp contrast compared to French exports and imports from other countries, which recorded a substantial increase compared with previous months as reported by the Financial Times.
This vindicates the forgone conclusion that trade barriers and accompanied uncertainty would have a significant impact on trade activities between the UK and the EU, its largest trading partner.
Although Johnson’s deal was able to bypass most of the tariffs on goods, it could not completely averted the inevitable disruptions that it would cause in terms of higher shipping costs, transport delays, health certificate rules as well as more complex customs requirements.
There are still some tariffs on certain goods that are imported into the UK and re-exported to the EU.
For instance, German exports have also suffered a sharp decline in January, approximately 30 per cent year-on-year – triggering off a drop in trade between the two countries.
Previous month, Italy recorded a 38 per cent year-on-year decline in exports to the UK and a 70 per cent reduction in British imports in January, sharpest reductions in trade volumes compared with other European nations.
The impact could not be certain to be caused singularly by the Brexit against the backdrop of a global pandemic, its sharp blow to the global trade in the first half of 2020 and other factors.
“I have a hard time deciding what is the impact of Brexit and what is simply down to the impact of coronavirus, Gilles Moec, chief economist at French insurer Axa, told the FT.
In terms of the Brexit’s Northern Ireland Protocol, a ban on importing plants originated from Britain to the region has temporarily been lifted, while most of the agricultural goods are or will be subject to extra regulatory processes.
This list of prohibited products include plants or vegetables grew in Britain or traces of soil still attached to them and this created issues for many businesses in the Northern Ireland, especially, for garden centres.
What is obviously is that the issue has become a focus of on-going public discussion on the merits of the Protocol. Ardent critics of the Protocol are of the view that the issue provides with them tangible evidences to the excessive and disproportionate bureaucracy involvements in the process.
This comes against the backdrop of the UK taking a strong stance on the issue, unilaterally extending the grace periods that presently limits regulatory checks on imports of agri-food retail goods and custom declarations on the UK parcels sent to the Northern Ireland.
As reported, the EU will take legal action against the UK for the moves, accusing the UK’s government of breaching the NI Protocol.
Expansion of UK’s reach
As challenges of the Brexit come with opportunities, the UK government should make the maximum of use of the unfettered freedom that it gained following the costly divorce from the EU.
The only way forward for the UK seems to forge new trade alliances with other countries outside the EU and also to reinvigorate regional bodies such as the Commonwealth. It may also explore the possibilities of entering into preferential trade deals with emerging economies like that of India.
