Thread by @JohnSpringford

My estimates for the impact of Brexit on trade are out. Thread.

Leaving the single market and customs union in January reduced Britain’s total goods trade by £16 bn, or 22%.

cer.eu/insights/cost-…

That is on top of a 10% reduction in total trade between the referendum and the end of the transition period, compared to a doppelganger UK that remained in the EU.

My 2014 gravity model forecast that the loss of total goods trade would be 18%. @thom_sampson and co forecast a hit to total trade (including services) of 13%. The Treasury forecast 10%. It's worse than that so far.
cer.eu/publications/a…

The caveats about the January data are important to bear in mind. See @thom_sampson's thread. But over time we will know how much of the Brexit hit to trade is permanent. I will update my model as new data comes in.

https://twitter.com/thom_sampson/status/1369932340466749443

Method: I have created two new ‘doppelganger’ UKs using goods trade data, to estimate the size of the impact of Brexit on trade. The doppelgangers are made up of other countries whose trade – and broader economic -performance has been similar to Britain’s.

The first doppelganger did not leave the single market and customs union in January. The second did not vote to leave the EU in January 2016.

I focused on goods trade because it has been less badly affected by the pandemic after the first lockdown. Goods trade in most OECD countries, including Britain, had recovered its pre-pandemic level in December 2020.

And goods trade has been less affected by lockdowns: see France, Belgium and the Netherlands.

Stockpiling is a bigger issue, and we will have to wait for more data to see how bad the permanent hit is.

I will update the model as we go.

But so far Brexit has been disastrous for British trade.