“The Latest on Trade” under the TCA and the Department of Business and Trade

By Paul Giles

In our October 2023 issue, we published an article “Real terms shortfall in UK-EU exports – Beware of false prophets!”. It used ONS data, at the time extending to the second quarter of 2023, to seek pre and post-Brexit trade trends. With 2023 quarter 3 and two-thirds of quarter 4 data now available, we’ve been able to update that article’s charts and, at the same time, extend them from the original 2012 quarter 1 start point back to quarter 1 1997 (see separate article below).

The updated charts show no change at all in the previously-established trend for UK-EU goods exports real values (ONS CVM data aka “volume data”). This is one of a small real growth percentage up until the replacement of the single market by the Trade and Cooperation Agreement (TCA) (i.e. Brexit), then a 5% real terms annualised decline.

The updated charts value the decline since 2018 quarter 4 (the last “stable” period) at a current £15 – £20bn per annum. This is part of a £45bn of export lost under the TCA. Both “shortfall measures” are substantial.

The Department of Business and Trade remains determined to avoid “fessing up” these shortfalls to the public, in the hope that most will never notice. The current lack of honesty in government is shocking to many!

Instead, DBT publications seek to deflect by focusing on “huge Brexit wins”, for example apparently on the non-EU FTAs such as UK-Australia – the implications of which for UK beef farming we’ve already published here – and CPTPP. In fact, the contributions to UK GDP from non-EU FTAs are not only miniscule compared with the above shortfalls, but will not even start arriving for some years yet, while the TCA “Brexit hit” started over three years ago.

Below are three particularly shocking recent examples of this determination to deceive:

1. The Chair of the International Trade Committee directly addressed the above shortfall vs non-EU FTAs issue with the Secretary of State for Trade during the 30 November 2022 ITC Oral Evidence Session, referring to the OBR reports which support the Chancellor’s spending reviews.

The SoS started her “evidence” by indicating she hadn’t heard of the OBR reports – the one report with which every minister is familiar (!). She then proceeded to “flannel around” wasting the committee’s time for some minutes (aka “filibustering” – Questions 424-432 in the sessions’ transcript); the video, if watched, makes clearer how shocking the behaviour actually was. A formal complaint was submitted concerning the SoS’s behaviour.

2. Needing a “positive” speech for the opening of International Trade Week, 6 November 2023, the SoS chanced across a report that just happened to be published same day by the Institute of Economic Affairs. Called “Has Brexit really harmed UK trade?”, this report sought to mislead through omitting all of the shortfalls, challenging instead the validity of the work of her own government’s economic forecasters, the OBR.

The conclusions of this particular IEA report were immediately questioned by a number of academics, trade economists and by the Financial Times. While a document of my own extending to a dozen questions/error corrections was submitted same week to the IEA, an “educational charity”, no reply of any sort has yet been forthcoming.

The report’s author subsequently received an OBE in the New Year’s Honours.

3. Page 73 of the OBR’s November 2023 “Economic and Fiscal Outlook” reports the UK GDP CPTPP gain as 0.04%, exactly half of that previously published in the DBT’s Impact Assessment, an already miniscule 0.08%. As informal discussions with OBR and DBT failed to reveal the simple algorithms behind these percentages, two freedom of information requests have instead been submitted.

Only through publications such as CfE’s newsletters can the public be made aware of such situations on the ground!