3 min read
Rishi Sunak has conceded that Brexit has made exporting to Europe harder, with the chancellor telling MPs that new red tape facing UK businesses is a big reason why they are are being outperformed by those in other economies.
Sunak, who campaigned to leave the European Union in 2016, acknowledged on Monday that Brexit had resulted in a new “set of controls and things that people have to do” in order to move goods to Europe. This in turn, he said, had contributed to UK exports falling behind other countries.
The UK changing its trade relationship with the EU, its biggest trading partner, “was going to have an impact on trade flows,” he said.
The Office for Budget Responsibility (OBR) last week said the UK had become a “less trade intensive economy” and that its trade as a share of GDP had fallen two and half a times more than any other G7 country. Richard Hughes, Chair of the OBR, said that was because the UK through Brexit had “made it more expensive to trade with our single largest trading partner”.
Speaking to MPs on the Treasury Select Committee this afternoon, Sunak insisted it was too early to draw “definitive” conclusions about how leaving the EU had affected the UK’s trade performance, and that his department was “still trying to work through” the impacts.
However, in response to repeated questioning he admitted Brexit had made life more difficult for UK businesses to send goods to customers on the continent.
“It was always inevitable that there would be a change in our trade intensity with Europe as a result of the change in trading relationship,” the Chancellor of the Exchequor said.
“That was expected and unsurprising when you change a trading relationship with the EU”.
He said: “Without a doubt we are changing out trading relationship with the EU and that means a different set of controls and things that people will have to do.
“Obviously that will have an impact and I’m sure that’s a big part of the reason this is happening. It may just be a bit early to be definitive about which bits are doing what”.
He added that the benefits of new trade deals with the other countries, which Brexiteers like Boris Johnson described as one of biggest advantages of leaving the EU, would “take time” to materalise and not happen overnight.
As part of Brexit the UK left the EU’s Single Market and Customs Union, which for years had allowed businesses to trade freely with their counterparts on the continent.
As a result, businesses that want to send goods to customers in the EU now face an array of checks, meaning that trade is more time-consuming and costly than it used to be. Businesses that are import goods from the EU also face paperwork, though unlike Brussels the government is phasing it in over time.
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