For British companies who rely heavily on the E.U. export market, Brexit has been a nightmare, to say the least. Until recently, though, the full effects on British exporters have been unclear.
Some versions of Brexit currently under consideration by the cabinet could potentially cut U.K. exports by as much as a third, according to a study by a team of trade experts at the University of Sussex. The study also predicted that a fall in British exports would hit ‘Leave’ voting areas such as Sunderland, Coventry and Derby the hardest.
These areas are traditional hubs for British industry and could potentially see a massive rise in unemployment in the post-Brexit landscape. What’s more, the sectors that some in the government see as replacing industries hit by Brexit – such as design, marketing and hi-tech – as of now have little presence in these areas.
These industries tend to be located around London, the M4 corridor and Cambridge – regions that voted strongly against leaving the E.U., which could, ironically, be the least affected by the separation.
Even if Britain were to sign a free-trade agreement with every other major trade partner, some British industries would still be hit hard.
Food exports, for instance, would fall by 34% and textile exports would shrink by 30%, if the EU implemented protectionist trade policies against the E.U. In this scenario, overall manufacturing output would be cut by 13%.
Already, U.K. trade has begun to suffer from Brexit uncertainty. As many as 9,000 British firms chose either not to start exporting or stopped selling abroad in 2016 because of doubt around Britain’s trade position.
In the year after Brexit, exports fell by 1%, which may not seem like an alarming figure. However, trade commentators suggest that this will grow over time. This is due to the effect of British companies that would have become major exporters, but because of Brexit will never get a chance to explore new markets. As a lag period passes, this is expected to be felt hard and could potentially see the U.K. stagnate as a trade power compared to its competitors.
However, with the final Brexit agreement still highly contestable, the full effect of Brexit on British exports is anyone’s guess.