The European Central Bank (ECB) considers that “Brexit has been a last for trade in the United Kingdom and has contributed to a drop in the job offer”, as reflected in an article in its economic bulletin, published this Friday . ECB economists Katrin Forster-van Aerssen and Tajda Spital look at recent developments in the UK’s trade and labor market nearly two and a half years since the country signed its post-Brexit trade deal with the European Union (EU).
“Available evidence suggests that Brexit has been a drag on UK trade and has contributed to a drop in labor supply, factors that are likely to affect the country’s long-term growth potential,” say economists from before de Cristo The Trade and Cooperation Agreement between the EU and the United Kingdom (TCA, in English) was initiated on December 30, 2020 and provisionally entered into force on January 1, 2021.
The United Kingdom’s exit from the single market and from the EU customs union represented a profound change in economic relations, which “will foreseeably have an impact on trade flows between the two areas, but also on migratory flows, foreign direct investment , regulation, the financial sector, science and education, and in other areas of the British economy,” adds the ECB.
“Brexit has caused a significant reduction in trade between the EU and the UK in both directions which, however, could recover to some extent over time, once UK and EU companies have adapted. fully to the new environment”, according to the monetary institution. The weight of trade in terms of gross domestic product (GDP) has also declined and some small and medium-sized businesses in the UK have stopped trading with the EU.
As for the labor market, the ECB economists add, “there is evidence that the end of the free movement of EU citizens has also contributed to the sharp increase in labor shortages recently observed, especially in sectors with less skilled workers. However, the fall in the participation rate in the United Kingdom has also been due to other, possibly more important factors.
The ECB adds that there is considerable uncertainty about the long-term implications, including the extent to which the slowdown in EU trade and migration could affect potential labor supply and future productivity. British Prime Minister Rishi Sunak recently said that “Brexit has made beer and sanitary products cheaper.”