THE UK's decision to break away from the EU cost service exports more than £110 billion over a four-year period, new research has shown.

From 2016 to 2019 service exports from the UK were cumulatively £113bn lower than they would have been had the UK voted to remain in the EU.

Researchers at Aston University in Birmingham came to the figure by projecting how industries like IT, finance and business services would have grown compared to how they performed following the Brexit vote.

“What we find raises serious concerns about the damage to the UK’s services trade position and the likely spillovers to the economy and jobs related to the services sectors,” said Jun Du, professor of economics at Aston Business School. 

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The EU is the UK's largest trading partner, accounting for 43% (£294bn) of all exports and 52% of all imports (£374bn) in 2019. Services accounted for 42% of the UK's total exports to the EU.

The UK withdrawal agreement was light on its provisions for services - industries crucial to the economy. In 2019 the UK had an £18bn surplus in services but this was outweighed by a £97bn deficit in goods.

Data for 2020 was not included in the study due to the coronavirus pandemic distorting economies so greatly. Du told the Financial Times that more companies could move away from the UK as the pandemic wanes. 

She said: "The Covid period created difficulties in moving business and individuals[which] slowed down this relocation process it will now pick up, and get worse as businesses see that there is not much going on in UK-EU negotiations.

"I think this is only the beginning."

In monetary terms, UK financial services were hardest hit by the impacts of Brexit. 

Banks, insurers and asset managers moved thousands of people and billions in capital out of London and into new centres in Frankfurt, Paris, Amsterdam and Dublin to ensure seamless trading with clients after Brexit.

John Springford, the deputy director of the Centre for European Reform think tank, said that behind the scenes the effects of leaving the EU are "clearly showing up in the data". 

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Adding that data shows UK trade with the EU had fallen by a fifth because of Brexit, Springford added: "Brexit has already made Britain poorer compared to a branch of history in which Britain remained in the EU - or indeed in the single market."

In contrast, Ireland's cumulative services exports in the same period grew by £126bn compared to 2016 projections. Aston experts argue that this is due to Ireland winning UK businesses after Brexit, but some Irish economists disagree.

Conall Mac Coille, chief economist at Ireland’s largest stockbroker Davy, said the Irish "boom" was down to growth in the ICT (information, communications and technology) sector through companies like Facebook and Google.

He added: “These companies were already operating in Ireland prior to the referendum and have seen explosive growth since then.”

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The SNP's shadow Europe spokesperson at Westminster Dr Philippa Whitford MP (above) said: "With each day that passes, the impact of the extreme Tory Brexit on our economy, businesses and services continue to emerge.

"New research, which reveals that the UK's service exports were a staggering £113 billion lower than had the UK remained part of the EU, is utterly devastating. In contrast, Ireland is witnessing a rise in service exports over the same period as they attract business lost by the UK.

"Brexit has been nothing short of one unmitigated disaster after another - and it is our businesses and key industries that are paying the price, with people's jobs and livelihoods on the line.

"Scotland voted overwhelmingly to reject Brexit and it's clear that the only way to protect our economy, businesses and jobs, and secure a strong recovery from the pandemic, is to become an independent country and return to the EU.

"Once the acute Covid crisis is over, people in Scotland have the right to choose a fairer future with independence."