Ursula von der Leyen’s point on opening a new chapter in UK-EU relations could be as critical as the deal they discussed.
Closure for a new arrangement on Northern Ireland is still to come, although the principle of what has taken place is important. There are interests to serve and compromise but still progress in place of dispute.
Nobody is suggesting an overthrow of Brexit and the UK joining the club again. A need for non member paperwork will continue, ATA carnets be required for temporary export, although other hurdles could gradually go.
An interesting change in the relationship, at a time when a variety of bodies are reporting on the developing effects of Brexit.
The Current Outcome
A House of Commons publication at the end of 2022 outlined the picture. The EU remains the UK’s largest trading partner, although a combination of the coronavirus pandemic and Brexit saw trade with them contract.
There has since been a partial recovery, with the latest export figure being £267 billion, against imports from the EU of £292 billion. Services performed quite well, the trade deficit was caused by a £67 billion differential on goods.
Whilst stating that the longer term trend is downward, other reports confirm a degree of recovery, although a few tried taking a different tack.
If Brexit Hadn’t Happened
Researchers at Aston University assessed the impact of the Trade and Cooperation Agreement by creating an alternative model, one where the UK had remained in the EU.
Their statement that exports to the EU would be higher is not a shock, although they highlighted how much more the range of goods flow would have been maintained. The variety of products could have been over 40% higher.
This arises from many smaller businesses pulling out of export to the EU. An outcome that Aston believe has serious implications for exporting and productivity in the future, with fewer growth businesses around.
The Economic and Social Research Institute, an Irish think tank, took a similar stance. Creating a parallel universe where Britain stayed in the single market.
They endorsed the point from Aston, that UK firms producing low profit goods, or exporting at low volume had ceased to ship to the EU. Also noting that other UK exporters were losing opportunities and market share in most EU countries.
This applied to an extent in the other direction, with EU exporters pruning shipments to the UK, due to what the research defined as reduced appeal and certainty.
Back To The Real World
We can’t argue with the conclusions above, with their data suggesting that UK EU trade is around 20% down from where this might have been. Neither is there any visible political will to make a total U-turn.
The path which led to the new Northern Ireland agreement is however encouraging, not least at a time when all of Europe is cooperating in other ways. There are further bridges which could be built and reasons to assume they will be.
A process which will be slow, with no expectation that 2023 will transform into a bumper year for cross channel trade. Even so, expecting gradually improving avenues for trade across the channel is quite rational.
This is not a situation where much animosity remains within the populations and businesses on both sides see the opportunities. We will still be supplying ata carnets for the EU but hope to see a few encouraging changes on a key trade route.