Ten years on, Brexit's economic impact is becoming clearer

Key developments are emerging from the global stage. Ten years on, Brexit's economic impact is becoming clearerPublished7 minutes agoByFaisal Islam Economics editorNot long after the UK left the EU in 2020, a Bristol-based firm called Eskimo started selling a new kind of high-fashion and energy-efficient electric radiator, based on new technology developed by academics in the city. They planned to send them around Europe using the Channel Tunnel. It was a timely product given Europe's green ambitions, and with orders flowing, its Birmingham factory was being kept busy.

The boss Phil Ward tells me his start-up has continued to grow, but that in his view it could have been so much more without what he calls "the Long Brexit effect": in 2020, 40% of his exports went to the European Union, and by 2025 it was just 5%. The post-Brexit deal agreed with the EU by then-Prime Minister Boris Johnson in December 2020 guaranteed zero tariffs on exports to the EU, but Ward says that despite this, red tape and paperwork not directly related to tariffs were enough to create delays, costs and the expectation of hassle for prospective customers. Eskimo did manage to export some goods to agents in France but it stopped selling directly to European consumers entirely.

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A planned expansion to Germany floundered. And as Eskimo discovered when it attempted to export towel rails to Australia and New Zealand, both countries abide by international safety standards that are heavily influenced by the EU's CE mark. This matters because one theoretical potential Brexit benefit was that it would allow UK regulators to not follow the EU's safety regulations and take a more pro-innovation, less regulatory approach for high-tech inventions.

Eskimo's experience is one example of a broader trend reflected in export figures. The UK Trade Policy Observatory at Sussex University calculated a rapid 26% reduction in the different types of UK exports by 2023, while a new study from Aston University Business School using five years of more detailed trade data concludes a loss of 53. 8% of the type of exports and 31.

These figures for "trade varieties" are falls in the number of products sent to different EU countries. A decade ago, many economists argued the UK would sustain longer-term economic damage by leaving the EU and many believe that damage has come to pass. But to make that call you have to compare what did happen with what might otherwise have happened were it not for Brexit and doing that is a matter of method and statistical judgement.

And that judgement has to account for the fact that the period since Brexit has been a time of huge global flux. The pandemic that struck in the spring of 2020, the war in Ukraine that began two years later and, more recently, the energy price shock sparked by the conflict in Iran all have to be accounted for. So too does the question of whether a Brexit-free UK would have really kept up with the Silicon Valley tech boom in recent years to the extent Brexit Britain has.

The story has become one of the most prominent items on the global agenda.