Rejoining customs union would not fix damage caused by Brexit, research finds

Brexit has depressed UK exports to the EU by 12%, and rejoining the customs union would undo only a fraction of the damage, research shared with the Guardian shows. With the UK’s future relationship with the bloc likely to feature prominently in a potential Labour leadership contest, the economists John Springford and Anton Spisak, of the Centre for European Reform, provide fresh evidence of the damage caused by exiting. A decade on from the referendum, they have found that services sector exports to the EU are 7% lower than they would have been if the UK had remained in the EU, and goods exports are 16% lower. Using detailed trade data and economic modelling, they show that the “overwhelming majority” of the impact – 10% of the total 12% decline in exports – is accounted for by leaving the single market. “The regulatory costs related to Brexit – such as new certification procedures and checks for compliance with EU standards – have had a much more significant impact on UK-EU trade than customs-related barriers,” they say. The hardest-hit sectors have been travel, finance and insurance, chemicals and pharmaceuticals, and agrifood. The estimate of lost services exports is larger than previous research has suggested, because the authors take into account a significant uptick in services trade within the EU since the Covid pandemic that the UK has missed out on. …