- EU-UK deal recognising each other's product
testing would have boosted goods exports
by between £3.7bn and £6.5bn a year, finds
think tank
- Automobiles, electronics, and pharmaceuticals would have
benefited most
- IPPR urges government to prioritise mutual EU recognition
agreement, based on dynamic alignment, to end duplicate testing
UK goods exports to the
European Union could have been up
to £6.5 billion
higher each year from 2021 to 2024
if Britain had secured a deal to prevent duplicate product
testing after Brexit, according to new analysis by the Institute
for Public Policy Research (IPPR).
The think tank estimates that the
absence of such a deal may have cost UK
exporters between £3.7 billion
and £6.5 billion a year in
lost revenue since the UK's post-Brexit trading arrangements
came into force. At the upper end, this
translates to around 0.18 per
cent of GDP, more
than a tenth of a year's expected economic
growth, based on current OBR forecasts.
The losses stem from requirements for
some British products to undergo additional testing and
certification before they can be sold in EU markets.
IPPR argues that a mutual recognition
agreement (MRA) predicated
on "dynamic alignment where the UK
keeps relevant product rules in step with the
EU would allow UK and EU authorities to
recognise one another's product assessments, reducing
costs and uncertainty for
exporters and thereby boosting trade.
The estimated losses are
concentrated in three industries:
-
Motor vehicles and
their parts exports would have
been between £2.48 billion
and £3.42 billion higher
each year under an MRA, IPPR estimates.
-
Electronics exports
could have been
between £1.17 billion and £1.67 billion higher.
-
Pharmaceuticals exports would
have had an estimated annual uplift of
between £0.74 billion and
£0.82 billion.
The findings highlight the scale
of trade missed out on as a result of post-Brexit
regulatory barriers, providing one of the clearest
opportunities to reduce friction in UK-EU relations.
IPPR's new report is the first attempt
to causally quantify the impact of
losing an MRA after Brexit
isolating its impact from other factors that could
also have caused exports to decline.
Researchers tested a range
of alternative explanations for the decline, including
Covid-related disruption, changes in global supply chains,
sanctions on Russia, energy market shocks, and shifts in
re-export patterns. The estimated impact of not having
an MRA remained large and statistically significant
throughout.
IPPR is calling on the government to
pursue a mutual recognition agreement with the EU to
remove costly and unnecessary duplication, with the
automotive, electronics, and pharmaceutical industries
at the centre of negotiations. It also urges that
this be based on dynamic alignment, which it says would
encompass more goods and be more endurin
Joseph Sassoon, economist at
IPPR and co-author of the report, said:
Since Britain left the EU,
thousands of products that are made and certified in
the UK have to be tested and certified by EU bodies
before they can be exported.
"Our findings suggest that this
has come at a significant cost to UK exporters. Removing
duplicate testing requirements could have increased exports by up
to £6.5 billion a year while reducing unnecessary costs and
delays for businesses.
"At a time when growth is hard to
come by, a mutual recognition agreement with the EU
would be a practical way to boost trade and support key sectors
of the UK economy.
ENDS
NOTES TO
EDITORS
-
1. The IPPR
paper, Aligning for growth: The benefits of an
EU-UK mutual recognition
agreement,
by Joseph Sassoon and Holger Breinlich, will be
published on September
24 (0001) at http://www.ippr.org/publications/aligning-for-growth-MRA-UK-EU
