Recent research from the Centre for European Reform (CER) indicates that the economic impact of Brexit on UK exports is significantly more tied to the departure from the single market than to customs-related barriers. According to economists John Springford and Anton Spisak, the UK’s total exports to the European Union have experienced a 12% depression, with the vast majority of this decline attributed to regulatory friction rather than tariff issues.
The Single Market Impact
The study highlights a stark divide between sectors, with goods exports currently 16% lower than they would have been had the UK remained within the EU. The services sector, which includes finance, insurance, and travel, has seen a 7% decline. The authors note that the impact on services is particularly notable, as the UK has failed to capture the post-pandemic growth in services trade that has occurred within the bloc.
“The regulatory costs related to Brexit – such as new certification procedures and checks for compliance with EU standards – have had a much more significant impact on UK-EU trade than customs-related barriers,” the researchers stated. They conclude that 10% of the 12% total decline in exports is directly linked to the loss of single market access.
Customs Union Limitations
The findings cast doubt on the efficacy of rejoining only the customs union as a solution to trade stagnation. While such a move would eliminate complex “rules of origin” requirements for tariff-free trade, the CER analysis suggests the overall economic benefit would be modest. Critically, a customs union would offer no relief to the services sector, which is a major driver of the UK economy and has been among the hardest hit by post-Brexit trade arrangements.
Political and Economic Trade-offs
The research emerges as the UK government evaluates its future relationship with the EU. While ministers have maintained a commitment to avoiding a return to the single market or the customs union, the trade-offs required for deeper integration remain substantial. Rejoining the single market would necessitate accepting free movement, contributing to the EU budget, and adhering to European regulations without a formal vote on their implementation.
Furthermore, the analysis addresses previous expectations that increased trade with non-EU nations would compensate for the decline in EU exports. To date, the economists found little evidence that such trade growth has materialized at a scale sufficient to offset the losses. As the UK seeks a “reset” in its relationship with Brussels, the data highlights the complexity of balancing economic recovery with the political constraints of the current government’s mandate.
