UK's exports 'to grow by £37 billion' says Liz Truss
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A new world trade monitor published earlier this week by the Netherlands Bureau for Economic Policy Analysis found that UK goods exports fell 14 percent in the three months to January. In the same time, the global average saw a rise of 8.2 percent in the same period.
The trade monitor, known as the CPB, incorporating data from the Office for National Statistics, showed the UK performed poorly against advanced countries as well, where exports rose 5 percent.
Ahead of the new figures, the Office for Budget Responsibility (OBR) said that the UK had “missed out” on much of the post-pandemic global economic recovery, and suggested that “Brexit may have been a factor”.
Arch-Rejoiner Andrew Adonis used the new data to deride “Brexit, year two”, as the UK entered its second year outside the EU in January.
He added that the CPB suggested that the UK’s trade had been “decimated”.
Michael Saunders, a member of the Bank of England’s monetary policy committee said Brexit had “reduced the economy’s openness, in trade and labour mobility”.
New data from the ONS on Thursday showed that more than half of UK businesses had switched to sourcing materials more domestically since the UK had formally left the EU.
The OBR warned that UK trade “lagged behind the domestic economic recovery”.
It added that as the UK has become less trade intensive, the country’s productivity would be reduced by 4 percent over the next 15 years.
Paul Dales, chief UK economist at Capital Economics, said “the bigger picture [is] that exports [are] still struggling to recover from Brexit and the pandemic”.
However, CPB analysis suggested the UK had been underperforming in the long term, with exports remaining below a 2010 average.
This suggests the UK export economy has been in decline since the financial crash over a decade ago.
The OBR poured cold water on the Brexit optimism that the many trade deals the Government had signed since leaving the EU would boost global trade.
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Since January last year, the UK has reached free trade agreements with more sovereign nations than any other country in the world.
The UK now has trade deals with 95 nations, having only 35 when it left the EU.
Though it has signed agreements with big trade partners such as Canada and Japan, many others make up relatively little of the UK’s export market and the Government has yet to reach a deal with the US.
However, it has started the process to become a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – a free trade alliance comprised of countries on the Pacific rim.
The OBR said that “none of the new free trade agreements or other regulatory changes announced so far would be sufficient” to impact its forecasts for the UK’s trade.
Instead, it estimated that Brexit would mean a 15 percent drop in imports and exports.
Gabriella Dickens, economist at Pantheon Macroeconomics, told the Financial Times that UK trade would remain “weak” in the medium term as UK exporters continued “to be slowly cut out of global supply chains”.
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