School of Business and Economics

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15 Nov 2021

Lords told that Brexit was affecting UK trade as far back as 2015

Business experts have told the House of Lords European Affairs Committee that Brexit started to affect UK trade as early as the 2015 General Election – five years before Britain withdrew from the European Union.

Dr Huw Edwards, of Loughborough University’s School of Business and Economics, and Dr Mustapha Douch, of the Edinburgh University Business School, have submitted written evidence to the Lords’ committee following the launch of an inquiry into trade in goods between Great Britain and the EU.

Their evidence is based on the findings of a recently published paper, The bilateral trade effects of announcement shocks: Brexit as a natural field experiment, which compares the effects of Brexit upon UK traders’ behaviour, based upon comparison with trade between other pairs of countries.

The key points are:

  • Brexit began to affect UK exports earlier than most other studies suggested: starting around the 2015 general election
  • By 2018, the anticipation of Brexit reduced exports to the EU countries by 25% compared to what we would otherwise have expected. This impact is larger than the 15% long-run effect assumed by the Office For Budgetary Responsibility in the recent Budget.
  • Anxiety about the future competitiveness of the UK also reduced exports to non-EU countries by about 15%. This is because UK exporters are mostly dependent upon EU supply chains

The House of Lords European Affairs Committee, chaired by Lord Kinnoull, launched the inquiry in September.

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