IPPR quantifies Brexit trade loss from missing EU mutual
A new IPPR report estimates the UK is losing between £3.7bn and £6.5bn annually in EU exports due to post-Brexit regulatory barriers, with motor vehicles
The UK is losing between £3.7bn and £6.5bn a year in exports to the EU due to the absence of a mutual recognition agreement on product testing post-Brexit. The IPPR thinktank's analysis, focusing on the period since the UK’s post-Brexit trading arrangements came into force in 2021, finds manufacturers are burdened by duplicate testing requirements.
This lost trade amounts to about 0.18% of annual national income. It is roughly three times the value the UK government expects to gain from its trade deal with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The potential export uplift is concentrated in a few key sectors.
Analysis
The IPPR's modelled gains show specific sectors bearing the largest potential export increases from a mutual recognition agreement.
| Sector | Estimated Annual Export Uplift |
|---|---|
| Motor vehicles and parts | £2.48bn - £3.42bn |
| Electronics | £1.17bn - £1.67bn |
| Pharmaceuticals | £740m - £820m |
Researchers isolated the impact of the missing agreement from other disruptive factors like Covid-related disruption, global supply chain changes, sanctions on Russia, energy market shocks, and shifts in re-export patterns. Joseph Sassoon, an economist at IPPR and co-author of the report, stated the findings were robust. "The estimated impact of not having an MRA remained large and statistically significant throughout," he said.
Context
The report is the first attempt to isolate the trade loss specifically caused by the lack of a mutual recognition agreement after Brexit. It argues an MRA based on 'dynamic alignment' would allow UK and EU authorities to recognise each other’s product assessments, reducing costs and uncertainty for exporters.
The UK’s relationship with the EU is a major talking point heading into the Labour Party Conference. Earlier this year, the Starmer administration pitched the creation of a single market for goods between the UK and EU to Brussels. EU officials rejected the proposal, stating they wanted deeper cooperation but that it had to align with fundamental principles, including no cherrypicking of EU policies.
Reaction
Political reaction to the trade barriers continues. Ed Davey, the leader of the Liberal Democrat party, said that if his party takes control at Westminster, he would begin talks to rejoin the EU single market and customs union.
From a policy perspective, report co-author Joseph Sassoon emphasised the practical benefits of a narrower agreement. He said a mutual recognition agreement with the EU would be a practical way to boost trade and support key sectors of the UK economy. The UK continues to lose out on annual EU exports worth up to £6.5bn without a mutual recognition agreement to eliminate duplicate product testing.
