While there’s a clear drive to project Brexit as being an unmitigated success at present, concerning export figures continue to undermine such optimism.
More specifically, the export of UK goods into the EU plunged by 40.7% in January as the new trading terms came into law, with this impacted by a combination of increased restrictions and the coronavirus lockdown.
Clearly, Brexit will have played some role in this decline, while further losses are projected throughout Q1. With GDP also declining on these shores, there’s no doubt that the UK is braced for a seismic economic shock in the near and medium-term.
But could Commonwealth nations and businesses help the UK to recover its economic standing, and if so, how?
How the UK Economy has Declined of Late
There’s no doubt that the UK’s economy has declined of late, with the coronavirus and subsequent lockdown restrictions compounding the uncertainty and logistical challenges posed by Brexit.
To this end, the Office for National Statistics (ONS) reported that gross domestic product (GDP) in the UK fell by a staggering 9.9% in 2020, with this representing the single biggest fall in annual GDP since the Great Frost of 1709 (when the economy shrank by 13%).
So, although economists have revealed that the UK has avoided the horror of a double-dip recession, the widespread decline of sectors such as travel and hospitality continue to compound the impact of economic tumult nationwide.
Although it’s hard to quantify the precise role that Brexit is playing in this decline, there’s no doubt that exports provide a significant insight into this, as economics books will underline.
We’ve already touched on how exports declined by 40.7% in January, while data from the Road Haulage Association (RHA) revealed that total loaded haulage exports fell by a further 47% last month.
As a result of this, it’s thought that more than one quarter of trucks crossing into the EU from the UK are now travelling empty, with this largely the result of increased trade restriction between these shores and the single bloc.
How Can the Commonwealth Boost the UK?
The extent to which the UK can pursue preferable trade deals with countries outside the EU post-Brexit is hotly disputed, but it is true to say that our government is now free to dictate the terms of its trade with third countries from across the globe.
This may offer something of an opportunity against a bleak economic backdrop, with so-called “Commonwealth” countries combining to create a huge socio-economic entity (although these nations are rarely considered as being part of a single block like the EU).
Interestingly, Commonwealth nations account for more than 17% of the world’s GDP (in Purchasing Power Parity terms), while they’re also home to 2.4 billion of the world’s total population. What’s more, these regions tend to boast favourable demographics when compared with major EU members, where working-age populations continue to age and shrink over time.
India best embodies the potential of Commonwealth nations, as this is home to a huge consumer market and continues to invest more in UK markets than the rest of the EU combined.
Not only this, but these two regions recently renowned and extended their trading arrangements, with more than 700 Indian-owned businesses now operating on these shores.
Clearly, this offers a glimmer of hope for the UK economy, so long as firms and talent based in Commonwealth countries are able to work and operate freely on these shores.
They’ll therefore need access to favourable legislation and expert assistance, along with potential incentives that may encourage companies to expand into UK markets.