BBC Breakfast: Rishi Sunak says he 'can't solve every problem'
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The Chancellor warned it was impossible to “disentangle” the impact of leaving the EU with the impact of the Covid pandemic. Britain’s exit from the EU transition period coincided with the outbreak of the Kent Covid variant and England’s third national lockdown.
There was an immediate plunge in trade with the EU but figures showed signs of recovery in the months that followed.
Last week, the Office for Budget Responsibility (OBR) said the UK had become a “less trade intensive economy” and trade as a share of GDP had fallen two and a half times more than any other G7 country.
The OBR’s chairman, Richard Hughes, said leaving the EU had “made it more expensive to trade with our single largest trading partner”.
The OBR said “leaving the EU will result in the UK’s total imports and exports being 15 percent lower than had the UK remained a member state”.
It added: “This fall in the trade intensity of UK output is likely to reduce the level of potential productivity, though the size of this effect is uncertain; we assume productivity is ultimately four percent lower after a 15-year period.”
However, Mr Sunak told MPs in the Treasury select committee yesterday it was “too early to be definitive” on the exact causes of the UK’s drop in trade.
He added: “Without doubt we are changing our trading relationship with the EU and that means a different set of controls and things people will have to do and that will obviously have an impact.”
The Chancellor said that the benefits of Brexit and the trade deals Britain was signing around the world would become more apparent in the months and years ahead.
“It was always inevitable that there would be a change in our trade intensity with Europe as a result of a change in the trading relationship,” he told the committee.
“That was expected and unsurprising.
“Trading relationships take time. They don’t happen overnight.
“So I think that of course that will happen over a period of time.”
Britain has signed new trade deals with countries since leaving the EU including Australia and New Zealand, and negotiations are also underway with Canada.
The Government believes post-Brexit the UK will be able to broaden its trading possibilities by securing deals with countries around the world.
Britain is also in the final phase of accession talks to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The bloc, made up of 13 countries, accounts for 13 percent of global GDP.
It has an annual value of more than £10trillion and is expected to grow considerably in the coming years.
More to follow…
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