Scholars find Brexit reduced British service exports by £ 110 billion

Brexit reduced British service exports by more than £ 110bn over a four-year period, according to new research, which highlights the far-reaching trade implications of Britain’s decision to part with the EU.

Experts at Aston University in Birmingham found that British service exports from 2016 to 2019 amounted to £ 113 billion of what they would have been if the UK had not voted to leave the EU in June 2016.

The researchers calculated the figure by projecting how the IT and finance industries in business services would have grown if they had continued their previous paths and compared it to how they had really progressed since the Brexit vote. The gap was £ 113 billion.

“What we find raises serious concerns about the damage to the UK’s business position and the possible effects of the economy and jobs related to the service sectors,” said Jun Du, a professor of economics at Aston Business School.

The findings point to the underlying challenges that British service exporters will face in maintaining trade with the EU following the conclusion of the UK agreement with Brussels after Brexit.

The agreement contains minimum provisions on financial and professional services, industries that are crucial to the British economy. In 2019 the United Kingdom obtained a surplus of £ 18 billion in trade in services with the EU, against a deficit of £ 97 billion in goods.

The 2020 data were not included in the Aston study, because the pandemic has severely distorted economies. Du told the Financial Times that the trend for service companies moving away from the UK could accelerate as the influence of the pandemic fades.

“The Covid period created difficulties to move companies and individuals [which] slowed down this relocation process. . . it will now recover and get worse as companies see that there is not much in the UK-EU negotiations. I think that’s just the beginning, “he said.

Exports of financial services were the hardest hit, in monetary terms, as banks, insurers and asset managers moved thousands of people and billions of capital from city centers and Canary Wharf to new Frankfurt centers. , Paris, Amsterdam and Dublin so that they could negotiate perfectly with customers after Brexit. Aston’s research found that the other most affected sectors in the UK included business services, travel, transport and IT.

“Behind the scenes the effect [from leaving the EU] appears clearly in the data, “said John Springford, deputy director of the think tank at the Center for European Reform, citing his own research and figures from the Office for National Statistics, the London School of Economics and the Tony Blair Institute for Global Change He said the data showed that UK trade with the EU had fallen by a fifth due to Brexit.

“Brexit has already impoverished Britain compared to a branch of history in which Britain remained in the EU – or, indeed, in the single market,” he added.

Cumulative exports of services from Ireland from 2016 to 2019 were £ 126 billion higher than trend-based projections through 2016. Aston professors argue that this is due to Ireland winning the British business after Brexit. Irish economists disagree.

“The boom in Ireland’s service exports has clearly been mainly due to ICT exports (Facebook, Google, etc.),” he said. Conall Mac Coille, chief economist of Ireland’s largest stockbroker, referring to the information, communications and technology sector. “These companies were already operating in Ireland before the referendum and have seen explosive growth since then.”