Key facts
- UK exports to the EU could be £6.5bn higher annually without duplicate product testing requirements.
- The IPPR thinktank estimates UK exporters lost between £3.7bn and £6.5bn annually since 2021 due to a lack of a mutual recognition agreement with the EU.
- Motor vehicle and part exports could have been £2.48bn to £3.42bn higher annually.
- Electronic exports could have been £1.17bn to £1.67bn higher annually.
- Pharmaceutical exports could have seen an annual uplift of £740m to £820m.
- The thinktank's report is the first attempt to isolate the impact of regulatory barriers on post-Brexit trade losses.
The UK is estimated to be losing up to £6.5 billion annually in potential exports to the European Union due to regulatory barriers and the absence of a mutual recognition agreement (MRA) for product testing, according to a report by the IPPR thinktank. The thinktank's analysis suggests that these trade losses, which represent about 0.18% of the UK's annual national income, are concentrated in the automotive, electronics, and pharmaceutical sectors.
The IPPR urged the UK government to reopen negotiations with the EU to establish an MRA. Such an agreement, based on 'dynamic alignment' where the UK keeps its product rules in step with the EU, would allow authorities to recognize each other's product assessments, thereby reducing costs and uncertainty for exporters.
Earlier this year, the UK government proposed the creation of a single market for goods with the EU, but this was rejected by EU officials who stated that any cooperation must align with fundamental EU principles and avoid 'cherrypicking'.
At the Liberal Democrat conference, party leader Ed Davey indicated that his party would seek to rejoin the EU's single market and customs union if they gained power, aiming to boost exports and economic growth by aligning with the UK's largest trading partner.
The IPPR report, co-authored by economist Joseph Sassoon, is the first attempt to isolate the impact of regulatory barriers on post-Brexit trade declines, testing and ruling out other potential factors such as COVID-19 disruptions, supply chain shifts, sanctions on Russia, and energy market shocks.