UK exports to the Republic hammered by Brexit, ESRI finds

The Republic “stands out” as having had a particularly large reduction in imports from the UK due to Brexit, while Irish exports to the region have suffered no notable impact, according to new research by the Economic and Social Research Institute (ESRI)

The research suggests there has been a 16 per cent reduction in goods traded from the UK to the EU, while trade from the EU to UK is down by 20 per cent relative to the scenario in which Brexit had not occurred.

Under that scenario, trade with the UK should have been expected to grow at a similar pace to that of the same products being traded with other EU partner countries around the world.

While goods traded between the EU and UK recovered most of their previous level in value terms following the sharp fall in the early months of 2021, it is still well below the levels that would have been expected if it had performed on a comparable level with other trade partners.

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Global exports of goods from the UK have been growing slowly. This may have been partially a result of Brexit spillover effects on supply chains, the ESRI said.

The impact of Brexit on EU-UK trade, therefore, does not appear as large if compared to UK trade with the rest of the world as it does when compared to the faster-growing performance of EU trade.

The research also looked across EU member states using this hybrid data approach and found that Brexit has led to a significant decline in trade with the UK in almost all cases although by varying magnitudes.

For most countries across the EU, the size of the impact is broadly similar for both export and imports.

However, the Republic “stands out” as having had a particularly large reduction in imports from the UK relative to its other international trade patterns.

Exports from the Republic to the UK, on the other hand, continue to perform in line with those of other markets with no notable impact to date of Brexit on the total levels traded.

As the paper used data for the UK as a whole, the increased trade between the Republic and Northern Ireland “may play a role in this outcome”, the ESRI said.

The research did not examine if there was variation across product types that may have had some firms experience reductions in exports to the UK and services trade was not examined due to more limited data availability.

The ESRI also examined in detail how some changes to the collection of trade statistics by Eurostat could have impacted previous estimates of the size of the Brexit effect.

It said the most accurate result came from a combined set of UK and EU data sources to minimise the effect of these technical changes.

The ESRI said the issue of whether the patterns of relatively slow UK export growth to the rest of the world and more rapid import growth can themselves be attributed a Brexit effect, perhaps via changing supply chains, was a question for future research.