23008_Nearshoring Report

The Trade and Cooperation Agreement (TCA) – the free trade agreement between the UK and the EU – was finalised in December 2020, giving UK manufacturers clarity around the new post-Brexit trade relationship, and largely preserving tariff free trade. However, this new relationship is by no means the same as the almost-frictionless arrangement prior to Brexit. Leaving the EU created new – and often significant – challenges and costs for UK businesses exporting to and importing from the EU. And in the post-departure period, imports from the EU into the UK have lagged the level of imports from non-EU countries. One of the suggested reasons for this is how UK businesses have adjusted their supply chains since Brexit: an ONS Business Insights and Conditions Survey of UK businesses found that, since the end of the EU transition period, 52% of businesses reported using more UK suppliers than before Brexit.

UNITED KINGDOM

EU AND NON-EU IMPORTS TO THE UK

180

EU

160

NON-EU

140

120

The UK has somewhat of a unique set of drivers related to trade and nearshoring, in that its departure from the EU in 2020 and the phase-out of the transition measures in 2021 have created a far higher level of friction and cost of importing goods into the country from its nearest neighbours – and largest trading partners – in Europe.

100

80

60

2018 DEC 2019 JUN 2019 DEC 2020 JUN 2020 DEC 2021 JUN 2021 DEC 2022 JUN 2022 DEC

SOURCE: Office for National Statistics

113

114

C U S H M A N & WA K E F I E L D

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