13 April 2022
First, UK’s trade with the EU and the ROW followed broadly similar patterns not only before the referendum, but also between the referendum and the introduction of the TCA in 2021. [...] Specifically, the shock to expectations in period 2 raised expected future trade barriers between the UK and the EU (first moment), and also heightened uncertainty over future relations between the UK and the EU, the UK and the ROW, and (presumably to a lesser degree) the EU and the ROW (second moment). [...] Under the TCA there is also uncertainty about the pace of the introduction and streamlining of customs checks, the extent of future regulatory divergence between the UK and the EU, and the future of UK-EU trade arrangements regarding Northern Ireland (second moment). [...] As the timing of the UK’s departure from the EU coincided with the Covid-19 pandemic, we also denote the start of the first and second Covid-19 waves in the UK in March and September 2020 with two green virus icons along the x-axis. [...] And third, UK exports to the EU relative to the ROW temporarily dropped in the quarter immediately following the implementation of the TCA, but this drop was not persistent and we do not find evidence that the TCA reduced UK exports to the EU versus the ROW from 2021 Q2 onwards.