The UK needs to overhaul its post-Brexit trade plan in order to protect manufacturing firms and stop the decline in goods exports.
The UK has “run out of road” when it comes to trade agreements after securing deals with over 90 countries and needs a new approach as deals with the US and China are not on the horizon, according to the Resolution Foundation.
The think tank warned that the UK’s post-Brexit trade plan has not been able to prevent a “worrying decline” in the volume of Britain’s goods exports – which are 17% below pre-Brexit levels at the outset of 2023.
The figure is significantly below France, the second weakest G7 performer, whose goods are just 6% lower. In its report, the Resolution Foundation also claims that this post-Brexit strategy failed to open up new markets for the UK’s services firms.
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Sophie Hale, principal economist at the Resolution Foundation, said: “For the first time in half a century Britain needs a trade strategy. But it does not have one.
“The recent focus on signing Free Trade Agreements to limit the loss post-Brexit of market access has been successful, but has now run out of road, with no prospect of further significant agreements.”
The think talk is calling for a twin-track UK trade strategy, with a defensive focus on goods and a new approach to promoting its strengths as the world’s second largest exporter of services.
“A new strategy must recognise the nature of the UK economy, developments in global trade patterns, and rising geopolitical tensions regarding goods trade in particular. That requires a twin-track approach, protecting important high value manufacturing sectors, from cars to chemicals, struggling to retain their place in European supply chains, while focusing on new markets for its world-leading services firms.
The report said high-value added manufacturing firms are particularly vulnerable following the UK’s exit from the EU.
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These firms are often reliant on being part of European supply chains, a position that will erode over time due to higher trade costs.
“Already by the end of 2022, UK exports of cars and chemicals were 11% below and just 2% pre- Trade and Cooperation Agreement (TCA) levels respectively – far worse than the G7 average of 4% below and 25% above,” the Resolution Foundation said.
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