Brexit dealt a whopping £ 113 billion blow to UK services exports even before the sector was left out of the final trade deal, according to a new study.
The IT and finance industries to business and professional services suffered from the timing of the vote to leave the EU in 2016, experts from Birmingham Aston University found.
The cumulative loss of £ 113bn was calculated by projecting the sector’s growth from 2016 to 2019 had the referendum not taken place – and it had continued on its previous trajectory.
“What we are seeing raises serious concerns about the damage to the UK’s trading position in services trade and the likely spillover effects on the economy and jobs related to the service sectors,” said Jun Du, professor. of Economics at Aston Business School.
But the figure does not include any data for 2020 – due to the distorting effect of the pandemic – or, most importantly, for the impact of the deal itself.
Service industries have long protested being ‘thrown under the bus’ – as the UK enjoys a £ 18bn surplus in services trade with the EU, against a deficit of 97 billion pounds of goods.
Ms Du warned that a trend for service companies to leave the UK is likely to accelerate with the lifting of Covid restrictions and the resumption of trade.
“The Covid period created difficulties in moving businesses and individuals [which] slowed down this resettlement process, ”she told the Financial Times.
“The situation will now accelerate and worsen as companies see that not much is happening in the negotiations between the UK and the EU. I think this is just the start ”
Since the Christmas Eve deal – which Boris Johnson called “fantastic” – the government has refused to reopen gap bridging talks, with a new “Partnership Council” to meet.
In March, an inquiry by a House of Lords commission of inquiry sounded the alarm:
* Financial services jobs are moving to the continent – after Amsterdam overtook London as Europe’s leading equity trading center.
* The failure of mutual recognition of qualifications – which will have “a serious impact” on architects, accountants and other professionals.
* The loss of visa-free tours by musicians and other artists – which “will make touring prohibitive and expensive”.
* The decision to withdraw from the Erasmus + student exchange program – Turing’s replacement program failing to “cover the costs” of studying abroad.
Aston research found financial services exports hardest hit by the 2016 referendum, as banks, insurers and asset managers moved people and capital from London to capital cities of the EU, in order to save smooth trade.
The other UK sectors most affected are business services, travel, transport and IT, he concluded.
Ireland’s services exports from 2016 to 2019 exploded by £ 126 billion, but Irish economists have disputed that this was a consequence of Brexit.