Insight
The cost of Brexit: April 2021 by John Springford 14 June 2021
We estimate that leaving the single market and customs union had reduced UK trade by 11 per cent in April 2021. That is on top of our previous finding of a 10 per cent hit to trade between the referendum and leaving the single market. Last month, our cost of Brexit model showed that leaving the single market and customs union had reduced the UK’s total goods trade by 11 per cent in March. Using the recently-released data for April, we estimate that total goods trade is once again 11 per cent, or £7.9 billion, lower.
CER INSIGHT: The cost of Brexit: APRIL 2021 14 June 2021
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Insight
Chart 1: The impact of leaving the single market and customs union on UK trade, April 2021 UK
90
Doppelgänger UK Single market exit
80 £7.9 bn/ 11% shortfall in total goods trade
Exports plus imports, £bn, seasonally adjusted
70 60 50 40 30 20 10
17 01 7 Ja n 20 Ap 18 ril 20 Ju 18 ly 20 Oc 18 t2 0 Ja 18 n 2 Ap 019 ril 2 Ju 019 ly 20 Oc 19 t2 0 Ja 19 n 20 Ap 20 ril 20 Ju 20 ly 20 Oc 20 t2 0 Ja 20 n 2 Ap 021 ril 20 20 Oc
t2
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20
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Ju
ly
17
Ap r
il 2
6
20
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Source: CER analysis of OECD and national statistical institutes data. Note: Countries that make up 78% of the doppelgänger had reported their April 2021 trade data by the date of publication, so the doppelgänger figure for March may be revised slightly in future releases.
To estimate the effect of single market and customs union exit, we use trade data from other advanced economies. An algorithm chooses – from a ‘donor pool’ of 22 advanced economies – a smaller selection of countries with economic characteristics that most closely matched those of the UK over the last decade. Those countries are combined into a ‘doppelgänger UK’, with the relative weighting of the selected countries chosen to create the smallest possible deviation from the real UK goods trade data between 2016 and 2019. By comparing the UK’s actual goods trade performance from January 2021 to that of the doppelgänger, we can assess how leaving the single market and customs union has affected Britain’s trade in goods. (For more details on how the model works, see the estimate for January.) COVID-19 does not significantly affect our model, because we only use it to evaluate the UK’s performance from January 2021, when goods trade in advanced economies had largely recovered to pre-pandemic levels. The countries in our doppelgänger UK are chosen using pre-pandemic data, which also reduces the impact of the virus on our estimate. John Springford is deputy director of the Centre for European Reform. CER INSIGHT: The cost of Brexit: APRIL 2021 14 June 2021
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