HAS BREXIT REALLY HARMED UK TRADE? - Countering the Office for Budget

The UK and EU have a tariff-free and quota-free trade deal and the UK’s major exports have been unperturbed by trade friction between the UK and the EU. [...] The trade intensity of the G7 countries in 2022 was 25 per cent for the US, 37 per cent for Japan, 67 per cent for Canada, 69 per cent for the UK, 72 per cent for France, 76 per cent for Italy and 99 per cent for Germany.36 The UK’s trade intensity is neither too low nor unusual in the G7. [...] But even when the terms of the TCA were known, the OBR in its March 2022 publication,44 entitled ‘The evidence on the impact of Brexit on UK trade’, explained the drop in EU imports and increase in non-EU imports as being caused by substitution rather than due to the Rules of Origin in the TCA. [...] The size of this adjustment is calibrated to match the average estimate of a number of external studies that considered the impact of leaving the EU on the volume of UK-EU trade.’45 (my emphasis) As the UK and EU have tariff-free and quota-free trade, only non-tariff barriers could reduce UK trade with the EU. [...] However, over the long run, the EU’s proportion of UK trade is likely to continue to fall simply because the rest of the world is growing faster than the EU and so offers the UK more trading opportunities.