The post-Brexit era is proving to be far more disruptive than first anticipated. According to a new report by economists at Aston Business School, the UK economy is not only experiencing short-term turbulence, but is likely to experience a long-term downturn due to changes in relations with the European Union. The economic fallout from the Trade and Cooperation Agreement (TCA) between the UK and the EU has already led to a significant reduction in trade, a trend that could worsen in the coming years.
Economic reality after Brexit
After the Brexit referendum in 2016, Great Britain faced economic difficulties. The Aston report, published in September 2024, highlights that the impact of Brexit on trade is deep and structural. From 2021 to 2023, British exports to the EU fell by 27% and imports from the EU fell by 32%. In stark contrast to the pre-Brexit era, this sharp drop reveals more than a temporary blip; this highlights the ongoing challenge.
Evidence shows that the TCA has not only led to a decline in trade. The British economy, which once benefited from close ties with the EU, now faces complex barriers that are not easy to overcome. With limited market access, tighter regulation and growing bureaucracy, businesses are finding it difficult to adapt to the new reality.
Why is the economic downturn likely to continue?
Several factors contribute to the bleak outlook for the UK economy post-Brexit:
Structural changes in trade: TCA introduced new trade barriers, including customs inspections and regulatory barriers, which will not disappear in the near future. These changes have fundamentally changed the way British business interacts with EU markets, resulting in reduced competitiveness.
Global economic conditions. Brexit challenges have been compounded by other global disruptions, including the COVID-19 pandemic and Russia's invasion of Ukraine. These crises have strained global supply chains, and the UK, already weakened by Brexit, is struggling to overcome these obstacles.
Limited opportunities for recovery. Economists suggest that without a major overhaul of the UK's trade deals, the recovery will be slow and incomplete. The TCA is unlikely to be revised anytime soon, leaving little hope for an immediate improvement in trade dynamics.
Personal opinion: is there a way out?
In my view, while the data paint a bleak picture, there is scope for the UK to mitigate some of the damage. Developing new trading relationships outside the EU, especially with emerging economies, could help cushion this blow. However, this will require strategic planning and a focus on innovation and digital commerce. In addition, the harmonization of certain norms with the EU can weaken trade barriers without compromising sovereignty.
The economic consequences of Brexit are far from over. Current trade trends suggest that the downturn will continue for years, if not decades. For businesses and politicians alike, understanding these structural shifts is key to navigating the turbulent waters of the post-Brexit economy.
To find out more about the impact of Brexit on the UK economy, see this comprehensive analysis of the UK from the Changing Europe think tank.
By understanding the full extent of Brexit's economic challenges, companies and politicians can begin to develop strategies to weather the storm and build a more resilient economy for the future.
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