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Brexit has made UK less open and competitive, study finds

Brexit has reduced the competitiveness of the British economy, with alarming implications for productivity and wages, according to the Resolution Foundation.

The research firm said a loss of openness since Britain left the European Union is set to leave the country poorer in the coming decade, with advanced manufacturing and parts of northern England dealt the heaviest blow.

The warning will raise fresh questions about whether Prime Minister Boris Johnson can deliver on an election pledge to “level up” poorer regions of the UK.

It comes amid heightened tensions between Britain and the EU as Johnson’s Conservative government seeks to rip up parts of the post-Brexit trade deal relating to Northern Ireland.

The analysis, carried out with the London School of Economics, warned that workers can expect to be almost £500 pounds worse off in real terms by 2030 as reduced productivity depresses pay levels across the economy.

Predictions that Brexit would lead to a large decline in exports to the EU never materialized, the foundation said in a report released Wednesday. Instead, it has had a more “diffuse impact.”

Worryingly, the sectors that are expected to shrink are more productive than those likely to grow, adding to the number of challenges facing the UK, the report warned.

Electrical equipment manufacturing will be among the worst-hit sectors since it’s reliant on cross-border supply chains, and the northeast of England will fare badly, it calculated. By contrast, food manufacturing, a key industry in the East of England, is set to thrive because it supplies the UK market.

“Some sectors—including fisheries—still face significant change to come in the years ahead,” said Sophie Hale, principal economist at the Resolution Foundation. “But the overall services-led nature of the UK economy will remain largely unaffected.”

Britain has suffered a sharp decline in trade openness since 2019, with total trade as a share of GDP falling 8 percentage points, the analysis found. France, with a similar trade profile to the UK, has experienced a 2 point decline.

The UK has also lost market share across three of its largest non-EU goods import markets in 2021: the US, Canada and Japan.

Bloomberg
Bloomberg

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© Bloomberg
The author’s opinion are not necessarily the opinions of the American Journal of Transportation (AJOT).

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