SINCE the EU referendum in 2016, there have been largely negative effects to the UK services trade, according to new research.

Even before the UK officially left the EU in 2020 and the transition period ended at the start of this year, the economic effects were being felt.

The UK experienced an average shortfall of £18.5 billion of services exports from 2016 to 2019, according to analysis from Aston Business School in Birmingham.

It was found that the uncertainty associated with the UK-EU trade negotiations following the referendum caused harm to the UK services economy as a whole, reducing firms’ exports of services.

Transport, travel, insurance and telecoms sectors were found to have experienced the most significant declines since 2016.

The research suggested that Ireland has benefited significantly during this period, with growth in post-Brexit services exports up by £24bn annually over 2016 to 2019.

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Jun Du, professor of economics at Aston Business School, said: “Brexit marked a rupture in the highly integrated UK-EU services markets that had been developed during the UK’s membership of the single market. However, the UK’s strength in services was not reflected in the government’s ambitions for the sector in the EU-UK trade negotiations that followed the referendum.

“There are other winners besides Ireland in some post-Brexit services areas. The Netherlands have increased considerably in ‘Business’ and ‘Intellectual Property’ exports.

“Spain has seen growth in ‘Travel and transport’ services exports. Germany has gained in ‘Transport’, ‘Insurance’, ‘Telecom’ and ‘Intellectual Property’ services exports. While Ireland seems to have done exceptionally well in relation to the export of ‘Telecom’ services, a sharp contrast emerges to the lost exports not just from the UK, but also from the Netherlands, Switzerland and France.”

Dr Oleksandr Shepotylo, a senior lecturer in economics, finance and entrepreneurship at Aston University, co-wrote the working paper and said: “UK services exports are 5.7% lower than they would be without Brexit. It reflects an overall decline of the UK as a place for doing business.

“What economists tend to agree on is that the UK’s exit from the EU’s custom union and single market may have more significant impacts on services than goods, and more severe impact on post-Brexit regulated services than unregulated services.

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“It will take some time for the full impact of Brexit on UK services to emerge. Freedom of movement and data flow in some areas between the UK and EU could remain restricted. Stability, transparency and regulatory consistency in financial markets could be challenged. But new opportunities might surface.

“Continued trade negotiations and dialogues regarding trade liberalisation are essential with the EU and large, fast-growing markets beyond Europe. Crucial to understanding these impacts will be reliable data and rigorous analysis. Our modelling of marked losers and winners in post-Brexit services trade provides new evidence for an open discussion of the post-Brexit trade in services.”