UK companies, already reeling from the pandemic, would lose tariff-free, quota-free access to a market of 450 million consumers that buys nearly half of Britain’s exports and provides a similar share of its imports.
For the European Union, the United Kingdom is much less important, accounting for just 4% of the bloc’s exports in 2019 and 6% of imports, according to the Ifo Institute, a German research group.
“Brexit means both sides lose, but the United Kingdom loses considerably more,” Lisandra Flach, director of the Ifo Center for International Economics, said in a statement on Tuesday.
The big hit
The 2016 Brexit vote led to huge uncertainty over the terms of future trade with the European Union, reducing investment into the UK economy and damaging growth for years to come.
The UK Office for Budget Responsibility (OBR), which produces economic forecasts for the government, said in November that even if London and Brussels are able to reach a deal, their new trading relationship is expected to lead to a long-run loss of output of around 4% compared to Britain remaining in the European Union.
“The long-term effects [of a no-deal Brexit] would be larger than the long-term effect of Covid,” Bank of England Governor Andrew Bailey told parliament last month. “It takes a much longer period of time for what I call the real side of the economy to adjust to the change in openness and to the change in profile in trade,” he said.
Automakers and farmers
For businesses, the end of the transition period in a few short weeks could spell huge disruption to their…
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