EU Reports On Brexit Impact
The EU has been mulling over the anticipated economic impact of the Brexit split. Releasing its Winter 2021 Economic Forecast, the EU suggested that Brexit will dent UK economic growth considerably, more than for the European Union, despite the new free trade deal between the two parties.
The free trade deal between the UK and the EU provides for zero tariffs and zero quotas on all goods trade that complies with the appropriate rules of origin. However, the report highlights that non-tariff barriers have increased substantially for both imports and exports from and to the UK.
“…[W]hile the FTA improves the situation as compared to an outcome with no trade agreement between the EU and the UK, it cannot come close to matching the benefits of the trading relations provided by EU membership,” the report observed.
It estimated that, for the EU, on average, the exit of the UK from the European Union under the FTA will generate a loss of GDP of 0.5 percent by 2022. The UK, meanwhile, will see a 2.25 percent drop in GDP over the same period. However, it went on to suggest that, compared to a scenario where the EU and the UK had failed to agree an FTA, the FTA has cut the negative economic impact on the EU by about a third and for the UK by about a quarter.
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