The UK could be heading for a significant downturn in the value of its imports and exports once it leaves the European Union, according to a new report.
Data compiled for EURACTIV.com by ReportLinker has offered evidence that the potential isolation from the European community that the UK will experience post-Brexit, and the accompanying loss of preferential access to key trading markets, will have negative effects.
During the first quarter of this year, Britain’s goods trade deficit with the EU stood at £25.3 billion (€28.6 billion), with EU countries exporting £65.6 billion in goods to the UK, while the UK sold £40.3 billion in goods to Europe. Moreover, around 53 per cent of the UK's imports come from other EU countries, whereas Britain accounts for only ten to 15 per cent of total export value generated by other EU nations.
As such, if trade tariffs are introduced or standards diverge after the UK leaves the EU, then European countries are likely to be able to shift their overseas sales focus to other markets to compensate, while the UK is hit by higher prices on a wide range of commodities.
Erik van der Marel and Philipp Lamprecht, senior economists at the European Centre for Political Economy, said: "The UK is intertwined with the EU market because of its supply chains, in which commodities and goods cross UK and EU borders multiple times.
"When increasing tariffs or putting in place diverging standards, these commodities and goods will become less efficient, rendering the UK economy less effective."
This warning comes during the same week that formal talks over the terms of the UK's departure from the EU commence. The British government has already been forced to concede that trade talks cannot commence until after the final 'divorce bill' has been agreed, whereas the UK had previously hoped the two issues could be discussed concurrently.