How Might Exports & Shipping be Affected by Brexit?
On 23rd June the UK public will vote on whether to remain a member of the European Union, or to leave the EU and go it alone on the world stage. Questions of international trade have been at the heart of the debate; it is a certainty that if the country does vote to leave, then our trade relationships with other EU member states, as well as nations further afield, will change. So what effect would a Brexit decision have on UK trade, exports and shipping?
The Current State of Play
The UK is the eleventh largest export economy on the planet, and according to Office for National Statistics (ONS) trade figures published in late 2015, half of Britain’s total goods exports are to other EU member states. Although the UK’s single largest export customer is the United States of America, our next biggest customers by value of goods exports are Germany, the Netherlands and France.
ONS balance of payments figures show that UK goods exported to EU member nations totalled over £147 billion in 2014, and while this figure has been falling somewhat over the past few years – from a peak of £165 billion in 2011 – much of our trade in Europe is facilitated by EU-wide market and trade policies.
We are arguably even more reliant on EU partners when it comes to imported goods. EU countries account for 54 per cent of all goods imported to the UK, and globally our biggest national suppliers of import goods by total value are Germany, China, the Netherlands, USA and France.
What Effect Would Brexit Have on Import-Export Trade?
It’s worth noting that a UK decision to leave the European Union wouldn’t necessarily prevent participation in the EU single market. Britain could, for example, choose to join Iceland, Liechtenstein, Norway and Switzerland as a member of the European Free Trade Association (EFTA), which would allow us to continue to take advantage of internal market legislation across the European Economic Area without actually being an EU member. Alternatively, the UK could negotiate a new trade agreement with the EU, similar to the bilateral agreements that Switzerland signed up to in 1999.
Political posturing from both sides of the EU referendum debate has been predictably contradictory with regard to Britain’s future trade prospects in the event of an exit vote. Pro-Brexit justice secretary Michael Gove – who favours complete separation from the single market – has stated that UK trade would thrive once outside the EU. Boris Johnson has likewise dismissed claims that leaving would harm UK trade, arguing that it would actually be able to “accelerate as a result of getting rid of so much bureaucracy and political interference”.
Many who want Britain to remain in the EU have a much more pessimistic view of our trade fortunes post-Brexit, predicting that a solo UK would have much weaker negotiating powers in international trade deals, with significantly less leverage than it currently enjoys as part of the European collective. This perspective was echoed during US President Barack Obama’s recent visit to the UK, where he stated that an exit would leave Britain at “the back of the queue” for trade deals – and that renegotiating trade agreements with the US could take up to ten years.
Local As Well As National Impact
With independent bodies such as the CBI and London School of Economics warning that leaving the EU would result in the UK experiencing a profound and long-lasting economic shock, there’s a distinct possibility that Brexit would negatively impact the goods trade. Locations such as the Port of Felixstowe – Britain’s busiest container port – could suffer if import and export trade wanes following an exit vote, and local Labour councillors have warned that it could have “potentially grave implications for the future prosperity of the Port of Felixstowe and local jobs if we leave”.
But will that much really change? Are Mercedes Benz really going to stop exporting their cars to the UK? There may well be a requirement for new trade agreements between the UK and EU member states, but it seems likely capitalism will win out. The UK is a net importer of goods from the EU and our financial services and technology sectors are highly prized throughout Europe, so common sense suggests deals will be made, and made swiftly, should we decide to leave.
If you have an opinion on Brexit and the impact it might have on imports, exports and shipping, please leave a comment below. We look forward to hearing from you!