A British Union flag on top of the Victoria Tower, part of the Houses of Parliament in London on May 23. [Photo/CFP]
The United Kingdom's decision to leave the European Union's single market and customs union cost the nation 27 billion pounds ($34 billion) during the first two years of its full independence, according to latest research.
The price tag for the two years following the country's January 2021 "final exit" was attributed almost entirely to damaged trade links, according to the researchers at the Centre for Economic Performance, London School of Economics.
While the cost of the nation's exit from the trading bloc was high, it was not as high as some forecasts, the study added.
It said small businesses had been especially hit hard by the reintroduction of trade barriers between the UK and the EU, with several thousand UK companies deciding to stop trading with the EU as a result. But it said big enterprises coped better with the country's exit from the bloc, known as Brexit, and continued to trade at essentially pre-Brexit levels.
The researchers made their conclusions after looking at information from the UK's customs agency related to more than 100,000 companies. They said that, by the end of 2022, some two years after the UK and EU signed the Trade and Cooperation Agreement, or TCA, the country was exporting 6.4 percent fewer goods volume to Europe and importing 3.1 percent less.
The decline in both imports and exports was expected to have been worse, with the Office for Budget Responsibility, or OBR, the UK government's independent economic forecaster, having earlier said it expected the country to see a 15 percent fall in trading because of Brexit, and a 4 percent drop in national income.
The London School of Economics analysis said the OBR's predictions could still end up being correct but that may not happen based on current data.
The Guardian newspaper quoted one of the report's authors, Thomas Sampson, as saying: "We find that, through the end of 2022, the TCA reduced goods trade by less than half as much as the OBR projected.
"That said, the OBR number is a long-run projection and we only study the first two years of the TCA; whether the decline in trade will get bigger over time remains to be seen. But the additional fall would have to be larger than what we've seen so far in order to match the OBR's projections."
The UK and the EU are scheduled to start talking in January about potentially updating the TCA, to make trading between the two sides easier in the years to come. The existing TCA includes barriers to trade such as customs checks and additional paperwork as well as excise duties and checks on the movement of plants and animals.
