Analysis shows Brexit caused £12 billion of lost trade in October

ITV News Business and Economics Editor Joel Hills reports on how the economic impacts of Brexit continue to ripple through the UK's economy

Christmas should be boom-time at the New Covent Garden Flower market in south London but traders are wresting with the combined impact of the pandemic and Brexit.

Almost all of the plants on sale here are from the European Union. Since January, the majority of them need paperwork to clear customs. 

Dean Knight says phytosanitary certificates, certificates of origin and phytosanitary inspections at the border are costing his business £55,000 a year.

The delays mean it now takes three days for plants to reach the UK, before Brexit it took 24 hours.

His Christmas trees are from Denmark, sourcing them has involved extra costs which he says he has to pass on to his customers.

“We’re going to have to or we won’t be around this time next year, it’s common sense,” Dean told me.

“We don’t earn enough money to slide away £55,000”.

From July the same customs procedures will apply to cut-flowers, woods, as well as some fruit and vegetables. 

“I don’t think florists realise what’s coming,” says Dean.

When the transition period ended in January, there was no cliff edge. The government’s “reasonable worst-case scenario” of 7,000 lorries queuing back onto the M20 in Kent never came to pass. But Brexit has disrupted trade.

The Centre for European Reform (CER) has modelled the trading performance of a UK that did not leave the EU, using trade data from countries - like the US, Germany, Greece, New Zealand and Sweden - whose performance was similar to the UK’s before Brexit. 

It then compared this “doppelgänger” with the actual performance of UK imports and exports since January. 

The CER used the latest trade data, published this morning by the Office for National Statistics, to calculate that leaving the Single Market and Customs Union reduced trade in goods in October by 15.7% or £12.6 billion.

That’s a big hit. 

Trade data is volatile and is frequently revised. The pandemic delivered a huge shock to UK and global trade but the deputy director of the CER, John Springford, says he’s “pretty confident” that Brexit is to blame for the slump. 

“We know that goods trade across advanced economies is now higher than it was before the pandemic, apart from in the UK and a couple of other countries who have got some other problems,” he told ITV News.

“So, we’re pretty sure it's not down to the pandemic that the UK is a long way behind other countries.”

The government acknowledged there would be “teething problems” when the transition ended.

Springford says his model suggests a “permanent gap” in goods trade has opened up.

The CER’s analysis attempts to isolate the impact of Brexit on our trade in goods, not on the economy as a whole.

It is an estimate but it’s broadly in line with the impact on trade that the government’s own forecaster assumes Brexit is causing.

The Office for Budget Responsibility thinks the UK economy will be 4% smaller in the long run as a result of leaving the EU. 

The new trade rules with the EU are causing headaches for food and drink producers in particular. 

The Cheshire Cheese company used to export to 16 EU countries, including France and Germany. 

The boss, Simon Spurrell, says Export Health Certificates have cost him all of that business, which was worth £250,000 a year. 

He says he’s also currently shut out of the Northern Ireland market.

“We’re actually trapped, at the moment, on the mainland of the UK because the same trade rules that apply to the European Union also apply to Northern Ireland,” he told ITV News.

“All cheese producers are now fishing in very small pond, whereas before we had a vast sea to fish in.”

The UK has left the EU but it’s worth remembering that Brexit isn’t really “done”.

The full economic impact will only manifest when the terms of the Trade and Cooperation Agreement are fully implemented and businesses have adjusted and reorganised themselves. 

New controls on EU imports begin in the new year. The government is in the process of trying to renegotiate the Northern Ireland Protocol.