Unbound: UK Trade post-Brexit

This study analyses the significant and lasting impact of the Trade and Cooperation Agreement (TCA) on UK-EU trade relations three years after Brexit. The findings reveal sharp declines in UK exports (27%) and imports (32%) with the EU between 2021 and 2023. The contraction in trade is attributed to reductions in both the variety of goods exported (33%) and the intensive margin of imports (28%). The study highlights that the TCA has caused severe disruptions in the UK-EU supply chain, particularly in consumer and intermediate goods. Sectoral differences suggest that smaller EU economies have been more affected by reduced UK export varieties, while larger ones like Germany and France have seen smaller declines. Non-tariff measures (NTMs), especially in agrifood, textile and material-based manufacturing products, have significantly impacted exports. The study emphasizes the need for policy interventions, including mitigating the adverse effects of the TCA, reconfiguring supply chains, and supporting firms in adapting to new trade barriers. Further research is recommended to understand the long-term consequences of the TCA and guide future trade policy decisions.