Brussels (Brussels Morning) The UK ended its political and economic marriage to the European Union bloc on 1 January this year and now the first economic results are emerging and showing the early impact of the divorce on Britain, Reuters reports.
According to data company IHS Markit, manufacturing and service companies have been hard hit by the disruption in exports and supply chain logistics and more severely so than what could be attributed to coronavirus pandemic-related effects.
Burdened by bureaucracy
British factories report the steepest increase in supplier delivery times among the six preliminary Purchasing Managers’ Index surveys performed by IHS, leaving the UK trailing behind Japan, France, USA, Australia and Germany.
The last-minute trade deal signed between the UK and the EU left the two sides free from tariffs and quotas, but not from red tape, since goods crossing borders now have to be checked at customs and that requires proper paperwork and coping with unfamiliar procedures.
While British Prime Minister Boris Johnson ascribed the ongoing trade disruption to “teething problems”, angering many business owners, trade experts believe some of the added costs and bureaucracy will remain for the foreseeable future.
According to the International Monetary Funds (IMF) estimates, the disruption caused by Brexit in the first quarter of 2021 is on course to reduce the UK’s economic output by 1%. IHS Markit also notes that services sector exports – which represent the bulk of the UK economy – have also suffered the strongest drop among the six countries in the survey.
A separate survey published by the Confederation of British Industry, released last week, also showed that UK manufacturers are losing confidence fast that they can compete in the EU market. Performance competitiveness in the EU has hit its lowest level since the survey first started in 2000.