For the first time in the five years since the Brexit referendum, acrimony in the relationship between the EU and the UK shows tentative signs of thawing. Rhetorical hostilities are as fierce as ever of course, but actions speak louder than words and on the ground both sides are quietly moving into damage limitation mode.
Minimising further economic harm will never eliminate the damage already done. The depreciation of sterling after the vote to leave left people in the UK paying more for imports and reducing living standards by 2.9 per cent, according to a new paper in the International Economic Review. The imposition of controls and checks on goods at the UK border is lowering trade with the EU, just as economists warned.
With trade figures heavily distorted by coronavirus and Brexit itself, it is best not to be overly influenced by a single statistic, such as the UK ceasing to be one of Germany’s top 10 trading partners. Instead, the longer-term trends highlighted in UK data show a steady and pronounced drop in UK exports to the EU compared with three years ago, with imports from the continent falling even faster. So long as we make the trivial assumption that the trade was valuable for producers and consumers alike, throwing sand into its cogs has hurt both sides’ economies and living standards. The vast majority of the pain, of course, is felt in the UK because business with the EU is much more important for Britain than vice versa.