A new report by the Institute of Economic Affairs (IEA) has challenged critics who claim that Brexit had catastrophic consequences for UK trade.
Authored by economist Catherine McBride, the report has illustrated that UK trade with both EU and non-EU countries did not experience a significant decline post-Brexit.
The report concludes that factors such as the COVID-19 pandemic, fluctuating global energy prices, and new “rules of origin” have played a role in shaping specific trading patterns.
These insights have raised questions about the accuracy of earlier, gloomy predictions.
In the analysis, Ms. McBride emphasised the crucial role of companies in trade and underscored the importance of creating a conducive environment for businesses.
She told The Epoch Times: “I think the important thing to remember is that governments don’t do trade, companies do trade. And so it’s very important that the government makes the UK a place where companies want to be based.”
Pinpointing specific government policies that hindered the business environment, she added, “I go through things that we are doing, which are not encouraging companies to remain in the UK; one was putting out bad corporate taxes.”
Richard Tice, leader of Reform UK, criticised the government’s approach, arguing that high taxation and regulation were harming the economy.
“Brexit gave the great opportunity to reduce taxes in certain areas at our decision, not Brussels, and it gave us the opportunity to slash whole swathes of daft EU regulations. Regrettably, the government has not chosen to do either of those things,” he told GB News.
“It has increased taxes, it has increased regulations and the direct effect of that is that we’ve got zero growth in the economy,” he added.
Trade Deals the Only ‘Brexit’ Thing
Despite criticising the government’s ability to fully capitalise on Brexit, Ms. McBride underscored the significance of the UK’s ability to strike trade deals independently.“In fact, it’s the only really ‘Brexit’ thing that the government has done correctly,” she told The Epoch Times.
One notable concern highlighted in the IEA report was the effect of high oil and gas taxes on the energy industry. Despite the government’s announcement of new licences, acquiring financing for development has proven challenging.
It comes as the government this week unveiled plans to mandate the annual renewal of oil and gas licensing in the North Sea.
While the United States stands as the world’s largest exporter of oil and gas, the report emphasises that the UK also possesses the potential to be a significant exporter. But current policies are, according to Ms. McBride, inhibiting the realisation of this potential.
“Another one was our very high oil and gas taxes … that’s one of our big exports. Even though the government has said they’re going to issue new licences, it’s very hard for anyone to actually get the finance to develop those licences,” Ms. McBride told The Epoch Times.
The report also shed light on significant gaps in the UK’s post-Brexit trade approach. The analysis pointed out that the country had heavy reliance on a few industries for both domestic and international goods exports.
Notably, the report emphasised the crucial role of service exports, which now constitute more than 50 percent of the UK’s total global trade, underscoring the need to retain these services within the country.
Report Challenges OBR Forecast
The report challenged forecasts made by the Office for Budget Responsibility (OBR) regarding the impact of Brexit on UK–EU trade.The OBR had predicted a significantly negative effect on the UK economy, estimating a 4 percent shrinkage in the long run owing to Brexit.
However, according to the IEA the trade patterns between the UK and the EU do not reflect the anticipated impact of Brexit. Contrary to the OBR’s projections, UK exports to EU countries increased by 13.5 percent between 2019 and 2022, spanning both pre- and post-Brexit periods.
Similarly, exports to non-EU countries grew by 14.3 percent over the same period. The IEA also noted a substantial rise in UK services exports, with a 14.8 percent increase to EU nations and a 22.1 percent surge to non-EU countries during this time.
David Miles, a member of the OBR’s executive team, acknowledged the uncertainties in their forecasts, stating they were “almost guaranteed to be wrong.”
Despite these admissions, he said that the OBR’s projections did not dictate the government’s tax or spending priorities.
The IEA report’s findings have garnered support from influential Tory figures such as Lichfield MP Michael Fabricant.
He told GB News: “An independent global Britain rather than one tied to European coat tails was always going to be a winner. We have done much to make Britain a more competitive place to invest, but still more needs to be done. We are the powerhouse of Europe!”
