The UK’s decision to leave the European Union ten years ago marked a significant moment for the national economy. Brexit has had significant effects on all aspects of the UK’s national and local economies. 

The most direct impact is that it has added barriers between the UK’s tradeable sectors and the EU market. These sectors tend to contribute more to growth in a place, as exporting goods or services brings money into the local economy.  

Good exports to Europe have decreased  

Since the official exit from the EU in 2020, goods exports from the UK to the EU have fallen by 14 per cent, compared to an 8 per cent decline in goods exports to non-EU markets. 

Figure 1 shows how this has impacted places by estimating changes in trade values (2022 price) per job in the tradeable sectors.   

In 49 of 63 British cities, goods exports to the EU have declined, and in 37 they have declined more than exports to other countries.  

Altogether, since the official exit, goods exports from British cities to the EU have declined by close to £20 billion, averaging to about £632 per tradeable job per year, compared to an average decline in goods exports to non-EU markets of £374 per tradable job per year.  

Figure 1:  Estimated goods exports to both the EU and the rest of the world have declined  

Source: HMRC, UK overseas trade in goods statistics; ONS, Business Register and Employment Survey; Centre for Cities calculations 

In three cities, reduced trade with the EU has led to more than £4,000 for every tradeable job per year since 2019. The most impacted city has been Sunderland, with exports to the EU falling by about £4,850 per tradeable job per year. 

Goods exports to non-EU markets have also decreased 

EU exports account for 62 per cent of the total decline in goods exports since the official exit.  

But goods exports to other countries have largely declined as well. This is the case for 38 of the 62 cities. In Worthing and Aberdeen, two cities with the sharpest decline in goods exports, non-EU exports have been the main cause.  

This suggests that Brexit trade barriers have played a significant role in the UK’s weakening goods exports, but they are not the only factor. Rather, the UK’s goods production and manufacturing sector may be losing global competitiveness for additional reasons, such as high energy prices.  

Service exports have increased  

Unlike goods exports, service exports from the UK to both EU and non-EU destinations have grown by more than 25 per cent since 2019 due to the UK’s competitive advantage in knowledge-intensive services (KIBS). 

Service exports are harder to estimate at the local level, but sectors such as KIBS have been the main contributor to the growth of places such as large cities outside of London.  

But this does not mean Brexit has been good or neutral for the UK’s service exports. Research shows it has significantly affected the sector, making it less appealing than its European competitors. In other words, KIBS and service exports would likely have grown even faster without Brexit. 

The more tradeable businesses, the better  

Brexit has negatively impacted the UK’s tradeable sectors, both goods and services.  

These sectors form the tradeable industries across places in the country, and local economies depend on them for growth. Policymakers must aim for more tradeable sectors in both goods and services in UK cities.  

For goods exports in particular, removing trade barriers with the EU and the rest of the world is important. It would allow stronger exports and potentially lower input costs for some businesses through cheaper inputs. But trade measures alone would not be sufficient. Policymakers must also address other challenges facing the UK’s manufacturing and production industries, such as high energy costs.