Politicians need to ensure UK trade steps out of “Brexit’s long shadow” to help boost the UK economy, according to a new report.
The British Chamber of Commerce (BCC) said improving trading terms with the EU was a crucial step to encourage trade, which has under-performed peers in the last few years.
Goods exports in particular have been weak, under-performing the G7 average by 15 per cent since 2020. Services exports have held up better, but restrictions on trade with the EU mean there are “stronger headwinds” to service exporters than a decade ago.
According to the Office for Budget Responsibility (OBR), trade intensity across the board has fallen by 1.7 per cent compared with 2019 whereas the G7 average has increased by 1.9 per cent.
“This is about much more than Brexit,” Martha Lane Fox, president of the BCC and Chair of the Business Council, said. “But Brexit casts a long shadow”.
“There is sometimes a reluctance among politicians to either recognise problems or suggest solutions, because of how they may be viewed either side of the Brexit divide,” Fox continued.
“This must stop. Our politicians must be bolder in their decision making. They must set out a strategy on how we mange EU regulation and, where it makes sense, to diverge so that British business can benefit. ”
Among a range of recommendations, the BCC said primary regulations on traded goods should mirror the EU’s in order to keep business costs low.
Regarding financial services, the report suggested the UK should seek a “distinctive regulatory approach” suitable for its own capital markets.
The BBC said there should be “strong arrangements” for cooperation between the EU and UK to minimise compliance frictions. Decisions on regulation should only be taken after the effect of imports have been considered, the report said.
“Regulations should be subject to scheduled reviews to check they are working as intended and encouraging investment,” it added.