The introduction of new post-Brexit trading rules last year caused a “major shock” to UK-EU trade, a study claims.
The research from the LSE Centre for Economic Performance found UK imports from the EU fell by 25% relative to those from elsewhere in 2021.
Its authors suggest new rules had also caused many UK firms to stop exporting to the trade bloc.
The government said it was ensuring businesses had the support they need to trade with Europe.
Thomas Prayer of the LSE called the decline in exports to the EU “remarkable”.
“It appears the UK simply stopped selling a lot of products to smaller countries in the EU,” he added.
Researchers also described the findings as “surprising”, given that Brexit had a greater impact on imports than exports in 2021 and the UK has delayed the introduction of many customs checks on EU goods until this year.
“The number of export relationships with the EU fell sharply in 2021,” said Rebecca Freeman, co-author of the report and associate of the Centre for Economic Performance’s (CEP) trade programme.
Analysis of changes in trade patterns for 1,200 products found a “sharp drop” in the number of trade relationships between UK exporters and EU importers, with “lower-value relationships” affected.
The researchers behind the report say that extra red tape, customs controls and taxes may have hit European businesses hard.
Full border checks are still yet to be implemented though. They have been delayed until July and there have been suggestions they might be put back again.
While exports to the EU appear to have recovered after falling earlier in 2021, the authors argue that this reflects an increase in sales of costly large machinery.
The total variety of goods sold has declined by 30% – perhaps because the cost of extra administration makes selling low-value items less attractive for smaller businesses.
