Tory MP makes Brexit swipe as Labour propose VAT cut
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City broker IG Group told City A.M. this morning that Brexit could reduce the UK’s exports to the EU by -7.73 percent by 2025. This, the experts say, is because some smaller EU countries are benefiting from Brexit – in particular Finland, Luxembourg and Portugal. The countries are predicted to see an increase in trade as a result of the vacuum left by Britain in the EU.
Other countries that are predicted to benefit include Ireland, Croatia, Greece, Lithuania, and Cyprus.
The improvements are most notable in places where trade was low to begin with.
This comes after a senior civil servant in charge of Brexit planning recently warned that some British businesses may “give up importing” after Brexit.
Philip Rycroft, who was permanent secretary at the Department for Exiting the European Union (DExEU) between 2017 and 2019, told BBC Radio 4’s afternoon programme the new rules might be too much for some companies earlier this month – although was quick to add to that we shouldn’t be too pessimistic about the impact.
With the introduction of new barriers to trade with the EU, Rycroft said some businesses may decide it “is simply not worth the hassle.”
These new rules include importers having to make a full customs declaration on goods entering the UK from the EU or other countries.
They can no longer delay these declarations for up to 175 days, something that was originally introduced to help cope with the disruption of Brexit.
Mr Rycroft said: “The Federation of Small Businesses reckon that only about a quarter of their members are ready for this.
“It’s a bit surprising in a way because they’d obviously had a lot of notice that this is coming.
“Businesses exporting to the EU from the UK have already faced these rules for the best part of a year.
“It’s now going to be those businesses in the UK that import from the EU that have got to deal with this, essentially, new Brexit bureaucracy.”
He added, however, that Covid also plays an important role in business uncertainty, saying: “Let’s not forget, they’ve had a pretty torrid year with Covid and everything else, so a lot of businesses won’t be ready.”
Mr Rycroft also stated that we shouldn’t jump to doom-mongering about Brexit.
He said: “I wouldn’t overdramatise it. At the margins there are new costs, which will ultimately have to be borne by the consumers.
“The Office for Budget Responsibility reckons that the net impact of this deal on our wealth as a country will be to reduce it by about 4 percent in the medium term.”
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Small EU countries are predicted to fill the space left by the UK exports, experts predict.
Luxembourg’s exports show an increase of 2017.99 per cent above estimates, at €16.38m instead of €0.77m.
To arrive at their prediction, IG Group analysts gathered export data from the UK, countries from the EU, and some additional selected countries, to identify trends from the impact of various events during 2020.
The team evaluated the UK’s main exports prior to Brexit, such as precious metals, vehicles, and pharmaceutical products, alongside the top exporters of the same products in the EU and Singapore to understand which countries were able to increase exports.
Chris Beauchamp, IG’s chief market analyst at IG Group, said this morning that “the UK’s vote to leave the EU in 2016 represented a huge leap into the unknown and Covid also created an additional layer of complexity to international trade and cross border investments.”
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