How the impact of Brexit on the UK economy was overwhelmed by the Covid pandemic

How the impact of Brexit on the UK economy was overwhelmed by the Covid pandemic



More than five years after the EU referendum, the UK still As a division As always on the issue of Britain’s accession to the European Union.

However, economists on both sides of the dispute agreed on one thing-the new rules and regulations brought about by the new relationship between Britain and Brussels have caused damage to the British economy, hit trade and exacerbated labor shortages.

But pro-EU and anti-EU economists have encountered problems when trying to assess the impact of the EU in the first six months UK-EU Trade and Cooperation Agreement, Because the economic impact of the Covid-19 pandemic has overwhelmed trade and employment.

Judging the long-term effects beyond the coronavirus crisis is also uncertain—the same is true of trying to find the economic interests of Britain’s break with Brussels.

John Springford, deputy director of the European Reform Center think tank, said: “In general, the new crown pneumonia epidemic has overwhelmed economic data and it is difficult to compare, so we cannot really unravel the impact of Brexit.”

Trade resumed after a sharp drop

The most important area where the impact of Brexit is rapidly emerging is trade in goods.After the inventory in December, additional customs and security inspections that began on January 1 led to trade A sharp decline In the first month of the year, it regained some lost ground.

But while there is no doubt that trade has been hit by Brexit, the overall situation depends entirely on the statistics used.According to the UK’s National Bureau of Statistics, UK exports to the EU in April fell by 5% compared to December last year. Eurostat, Official Statistics Office of the European Union, over the same period.

There are always differences in trade statistics, but economists say these differences are very large.

According to data from the National Bureau of Statistics of the United Kingdom, import data over the same period show that the value of trade in goods from the EU to the United Kingdom has fallen by 19% over the same period, while Eurostat has fallen by 13%.

Thomas Sampson of the London School of Economics believes that these trade differences are important. “If the British [ONS] The data is correct, and exports to the EU have been surprisingly good after falling in January,” he said.

The monthly bar chart of trade in goods (percentage change, December 2020 to April 2021) shows that the assessment of the impact of Brexit on trade depends on the statistics used

Statistical agencies are busy resolving these differences. ONS itself has now eliminated seasonal adjustments and intra-company trade issues. Detailed data shows that the difference lies mainly in the trade of automobiles and other miscellaneous manufactured goods.

Statistical difference

“We don’t have a conclusive answer,” said Matt Hughes, a senior statistician at the UK National Bureau of Statistics. “But we are paying more and more attention to the measurement of the country of origin and the country of delivery.” Under the post-Brexit trade arrangement, the UK measures exports of goods to the destination country, while the EU seeks to define the goods Trade in the country of origin or final destination.

This means that a car exported from the UK to Rotterdam in the Netherlands and then shipped to countries outside the EU is counted as an export to the EU in ONS statistics, but not imported from the UK in Eurostat’s data.

Even with these uncertainties in trade data Julian JessopAn independent economist who calls himself a “Brexit optimist” said that the economic impact of the new rules has been negative so far. “We know that an increase in trade barriers will reduce the volume of trade, which is clearly confirmed in the data, but the initial shock seems to be fading,” Jessop said.

This uncertainty prevents most economists and the independent regulators of the British government from revising their professional judgments on the long-term impact of Brexit. Expected to decrease Compared with staying in the EU, the level of GDP has dropped by about 4%.

Professor Jonathan Potters of King’s College London said that so far, long-term economic forecasts seem to be accurate. “Economists expect a fairly significant trade effect, but it will not be catastrophic, and this seems to have already happened. It is too early to say what the long-term effect will be, but there is no obvious reason to change based on what we have so far The estimated model seen so far,” he said.

After the one-time impact of the introduction of barriers, the question in the next few years will be to what extent the supply chain across the English Channel will become less attractive for investment.

Another key change so far is the movement of workers. New restrictions have restricted the right of EU citizens to work in the UK, raising concerns about labor shortages.

UK job vacancies (000s) line chart shows that job vacancies are returning to pre-pandemic levels

Professor Alan Manning, the former chairman of the Immigration Advisory Committee, said that widespread reports of labor shortages are caused by “a mixture of the new crown virus and Brexit”, and the fact that similar trends exist in other countries shows that this is not just Brexit. Impact. “Brexit has contributed, but it has not improved the shortage,” he said.

Manning added that some departments need to realize that the days when they can expect the workforce are over, and in some departments such as social care, employers need to pay more to ensure they have available employees.

The benefits of Brexit

If the evidence for the negative effects of Brexit is clear, then the benefits of leaving the EU are even more elusive.Britain has quickly Turned over Many trade agreements with countries that have already reached deals with the European Union and are about to sign with other countries such as Australia.

Few economists believe that these measures will significantly boost the British economy as the government assesses the impact of the British economy. Australian transactions Shows that the long-term total return is only 0.02%.

But Jessop hopes that other benefits will now appear because of “uncertainty [surrounding Brexit] Has been lifted”.

“This Roll out vaccines faster This suggests that regulatory independence may gain in the future,” he added.


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