Post-Brexit Impact: Belgian Goods Exports to the United Kingdom Witness Sharp Decline

Belgian exports of goods to the United Kingdom fell by 13 percent in the period between 2018 and 2021. This is evident from new research from KU Leuven, which has mapped the impact of Brexit on trade. For the export of goods from the European Union to the UK, this is approximately 18 percent lower than would have been the case without Brexit. 

On June 23, 2016, British voters voted to leave the European Union. It was a historic referendum: the United Kingdom had been a member of the European Union since 1973, and would become the first country ever to leave the Union. In December 2019, the Brexit agreement, which established a free trade agreement with the EU, was a fact, and at the end of January 2020 the British permanently left the Union. But it is clear that the trade effects have already been felt since 2016, the year of the referendum.

Three years after the exit, the question arises about the state of trade between the EU and the United Kingdom. Trade balances are far below pre-Brexit trends, according to research by professor of international economics Hylke Vandenbussche.

‘At the same time, there are winners, often from outside the EU, in the story: Norway has become an important supplier to the UK, and countries such as China and Russia export more to the UK, while countries such as Germany and the Netherlands clearly export much less to the UK. UK in the 2 years after the Brexit agreement,” the professor adds. ‘The value chains appear to be shifting: suppliers from the EU are being replaced by others.’ But imports into the UK from the US also fell in the post-Brexit period, which may also indicate other factors such as the corona effect and lockdowns that have temporarily led to value chain disruptions. The Brexit effect is therefore difficult to separate from the COVID19 effect. ‘That is why we use monthly data between 2015 and 2022 in our study. For almost all EU countries we find that Brexit had a negative effect on exports to the UK, but that COVID19 had a positive effect, which completely or partially offset the Brexit effect. masked. On average, EU-UK trade is clearly lower in the post-Brexit period than before.’

For Belgium, the figures show a decline in exports of goods to the UK by 4 billion euros between 2018 and 202. Expressed in percentages, this is a decline of 13 percent, while trade with other EU countries has continued to rise steadily in the post- Brexit, so we know that the decline in Belgian exports to the UK is more than likely due to Brexit. “After 2019, exports took a dip, but from 2016, the year of the Brexit referendum, the decline had already started, systematically,” Vandenbussche explains. “It could indicate that companies started preparing for the exit even before 2018.” 

The decline in Belgian exports corresponds to a loss of between 28,000 and 32,000 jobs, assuming that for every billion euros of output, approximately 7,000 to 8,000 jobs are needed to produce that output. “This does not mean that the loss of jobs all led to layoffs: during this period, the government provided a lot of financial support to companies, both to counteract the losses due to Brexit and those due to the corona crisis,” he adds. Vandenbussche. ‘This has meant that companies have been able to look for new sales markets, in which some have succeeded and some have not.’

Products such as traditional motor vehicles, food and drink are the biggest losers in terms of exports to the UK. The export of pharmaceutical products, machine parts, plastic parts, optical products and electric cars increased exponentially in the two years following Brexit (from the end of 2019). In the case of traditional motor vehicles, there are of course also changes in regulations that have put pressure on exports for some time.

The Belgian services sector appears to have been less severely affected by Brexit and more ‘resilient’ to the shock. Exports of services have fallen by 0.5 billion euros between 2016 and 2021. Sectors such as travel, communications and construction services are doing less well after Brexit in terms of trade, but transport services, financial services, insurance and computing services are doing well. better again. 

It remains to be seen how Brexit will further manifest itself in trade balances in the coming years. “This is an initial evaluation to see in which direction we are going,” says Vandenbussche. ‘Corona support was phased out not so long ago. The real impact of Brexit will only become clear in the coming years.’