The analysis, titled ‘Deep Integration and Trade: UK Firms in the Wake of Brexit’, used data from more than 100,000 firms between 2012 and 2022 to estimate the gap between the actual value of exports under the TCA and what would have been expected had the United Kingdom remained in the EU.
The Trade and Cooperation Agreement (TCA) reduced total goods exports from the UK by an estimated $34 billion, or 6.4 per cent, in 2022 due to a 13.2 per cent fall in the value of goods exported to the EU, according to the London School of Economics.
Researchers there found that 14 per cent of firms that had previously exported to the EU stopped doing so after the TCA came into force in January 2021.
It found that 14 per cent of firms (around 16,400) that had previously exported to the EU stopped doing so after the TCA came into force in January 2021.
Most of the firms whose exporting business suffered were smaller ones. To assess the effect by firm size, the authors split firms in their sample into five groups based on the number of employees. They found a negative impact of the TCA on exports for all but the top fifth of firms.
Among firms that continued exporting to the EU, the TCA reduced the average value of EU exports by 30 per cent for the smallest fifth of firms (with six or fewer employees) and by 15 per cent for the middle fifth (between 17 and 40 employees).
By contrast, exports by the top fifth of firms, those with more than 107 employees, were not affected by the TCA. The success of larger firms in maintaining their export levels dampened the decline in aggregate trade.
The researchers found no evidence that the TCA has had either a positive or a negative effect on firms’ exports to countries outside the EU. This means that the 6.4-per cent reduction in overall exports is entirely due to lower exports to the EU, a release from the LSE said.
Fibre2Fashion News Desk (DS)
