Brexit had ‘significant adverse impact’ on UK trade, says official watchdog

Office for Budget Responsibility analysis comes alongside latest plan to cut UK spending and hike taxes.

The U.K.’s exit from the EU had a “significant adverse impact” on British trade by reducing overall trade volumes and denting trading relationships with the bloc, according to the country’s official public spending watchdog.

The Office for Budget Responsibility’s (OBR) economic and fiscal outlook, published Thursday alongside the government’s autumn statement, forecast that Brexit “will result in the U.K.’s trade intensity being 15 per cent lower in the long run than if the U.K. had remained in the EU.” Trade intensity is a measure of a country’s integration with the world economy.

“The latest evidence suggests that Brexit has had a significant adverse impact on U.K. trade, via reducing both overall trade volumes and the number of trading relationships between U.K. and EU firms,” the finances watchdog added.

Projected growth in U.K. exports and imports is, in the near-term, lower than what the OBR predicted in its March forecast, because of slower global economic growth, lower consumption levels and reduced investment.

The OBR now expects trade volumes to decline over the medium-term, falling to 8.3 percent below present levels in the final quarter of next year.

Net migration into the U.K. will meanwhile decline from 224,000 a year in 2023 to 205,000 a year from 2026, according to the OBR, but this is still tens of thousands higher than the levels forecast by the watchdog in March.

The rise in numbers shows “sustained strength” in post-Brexit migration, the OBR said, despite the introduction of a point-based visa system for European Economic Area nationals, and could be explained by continued rises in the number of visas issued to non-EU migrants, which reached 1.1 million in the year to June 2022, the watchdog added.

Source: Politico