Seven months after the United Kingdom left the European Union, British trade began to feel cold. according to Office for National Statistics (ONS), exports of goods and services in the UK fell by 13% (£ 36bn) and imports by 22% (£ 66bn) from January to May 2021, compared to the same period in 2019.
A Other report Exports and imports from the same organization of services (banking-insurance, transportation, consulting, maintenance, etc.) in the first quarter of 2021 are 12% and 24%, respectively.
To an extent, this trend continues to cause pandemics. However, this decline is proving to be harder than the European average (exports fall by 15% and imports by 39%), indicating that Brexit will not take effect. The difference between the export of services to EU countries and other parts of the world is particularly marked in the areas of construction (-43% + 24%), repairs, maintenance (-62% vs. + 11%) and construction services. (-40% vs. -12%).
Fact Trade Cooperation Agreement These activities are not covered between the European Union and the United Kingdom, and thus the delivery of British services is not made competitive. EU members were given the freedom to decide whether or not to allow their various suppliers in their markets.
U.S. Works It also suggests that other service-exporting countries outside the EU could benefit from this situation.
Stayed in London
Ireland is the biggest winner from Brexit. The island may benefit from business relocation and business diversion from the UK, which has been helped by lower corporate tax rates and young and well-trained workers. Between 2016 and 2019, Ireland’s service exports increased by 24% (or 4 144 billion or 3 123 billion), driven by financial services, IT and transportation.
There are a lot of ec hacks in other European cities, which will benefit in the meantime. In January, Amsterdam overtook London The largest European equity trading center, absorbing a large share of the trade in Euro denominated assets. London place anyway Come to mind again Recently.
Other potential winners include Frankfurt (for banking operations), Luxembourg (for banking and asset management), and Paris (for financial, professional and business services). Even a serious competitor like Berlin can attract technological talent to its cultural centers and affordable prices.
However, most financial operators so far Stayed in London. The city still maintains its power to accommodate IPOs and other capital raising.
There has been no influx of financial jobs outside London A fraction Proponents of EU retention predicted. The four-year regulatory transition period for areas such as data protection and e-commerce will definitely prove useful.
However, these different considerations undoubtedly obscure the broader dynamics, which means that Europe’s overall ability to provide services may be weak.
An opportunity elsewhere in the world
Suppose a group of American investors wants to invest a billion pounds sterling in European stocks or other financial assets. In the past, when he left some work to specialists in Paris and Frankfurt for questions related to France and Germany, he could create a fund in London using a network of lawyers, accountants, bankers and other economists in the city. .
Today, due to Brexit, the group can no longer invest in some European securities from London. Investors need to create a second fund in Dublin, for example, to access all the European assets they want. The extra cost and time that leads them to decide that betting in Asia is more profitable than in Singapore may lead them.
If we consider this effect in all areas, it becomes enormous. It is certain that some investors will decide to leave the UK in favor of EU countries or bear the additional costs associated with doing business. But others will find that an opportunity elsewhere in the world is more attractive now. The danger is that this will translate into an overall change in the financial burden over time.
Looks like we already saw the hints for this.
Winners and losers
In the upcoming research, we analyzed the exports of major service providers in Europe and globally. We did this using trade data collected jointly by the World Trade Organization (WTO) and the Organization for Economic Co-operation and Development (OECD).
They point out that the United Kingdom is the largest service exporter in Europe and the second largest in the world after the United States. However, it seems to have lost its position after Brexit.
Ireland and the Netherlands are experiencing the strongest growth in the region in Europe, while China, India and Singapore are leading elsewhere. UK service export growth slowed to 11% during 2016-2019 compared to 2010-15.
Exports of services by country between 2015 and 2019
This is confirmed by the findings of our recently published research, which shows that the UK’s global share has increased from 8.9% in 2005 to 7% in 2019.
At the same time, growth in France, Spain, Italy and Belgium slowed, while Germany, the Netherlands, Switzerland, Luxembourg, Austria, and the United States remained stagnant. Ireland is the fastest growing service export country, but Singapore and India are also gaining ground.
It is noteworthy that between 2016 and 2019, we saw rapid growth in Asia in the areas of travel, finance, IT and creative services. In particular, there has been extraordinary growth in the economic, business, insurance and pension sectors in Singapore and in many sectors in China. It looks like a real boom.
This development may be partially reflected Industrial change The transition from manufacturing to services is taking place in the Asian world. It may also reflect the long-term shift of service centers from west to east – a global reorganization.
The question for years to come is whether the UK and European service classmates will be able to find arrangements that will help them maintain their collective strength – and whether they will be able to take advantage of opportunities elsewhere, especially in developing countries. Now US service providers have some lead.
WayJune do Alexander Shepotillo
, Senior Lecturer in Economics at Aston University. Original version of this article publishedEnglish
19 August 2021, 7:44
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