Logistics UK said reducing border friction and improving UK-EU trade flows could boost the economy by £12bn
Reducing trade friction with the UK’s key partners could unlock £12 billion for the economy, according to new analysis from Logistics UK.
The business group said a lack of alignment with major trading partners, including post-Brexit border frictions, had held back economic output by an estimated £12bn.
It said the figure was equivalent to around £400 per household in additional economic output.
Logistics UK, which represents businesses across the freight and supply chain sector, said closing the gap between the UK’s current trade intensity and its 2019 level could deliver long-term benefits for the economy.
The organisation has now launched a campaign urging the government to generate trade-led growth by fixing border friction and making trade smoother.
The call comes as Logistics UK chief executive Ben Fletcher prepares to meet senior policymakers and industry stakeholders in Brussels to discuss the UK-EU trading relationship.
He said closing the current “trade-intensity gap” through better alignment with trading partners and reduced border friction could boost growth without raising taxes or public spending.
“The UK grows when it trades, but unnecessary trade friction is increasing costs, reducing competitiveness and holding back growth,” Mr Fletcher said.
He added that, during a period of geopolitical uncertainty, the UK needed to “control the controllables”.
“Fixing the friction in the trade we already do could generate billions for the economy, drive growth and raise living standards, with our analysis showing that closing the UK’s trade-intensity gap has the potential to boost the economy by £12 billion,” he said.
“Removing Brexit red tape with our closest trading partner would go a long way to addressing this challenge.”
Analysis by independent transport economists MDS Transmodal for Logistics UK found that UK exports have fallen significantly to both EU and global markets in the decade since the 2016 Brexit referendum.
By tonnage, total goods trade with all countries, in both directions, is down by almost 10 percent over the period.
UK goods imports have fallen by 3.6 percent, while goods exports have dropped by 20.7 percent.
By volume, UK exports to the EU fell by 15.9 percent over the past 10 years.
Exports to non-EU Europe and the Mediterranean region fell by 5 percent, while exports to the rest of the world dropped by 37.2 percent.
Logistics UK said increased processes and border friction were likely factors behind the decline.
The group is urging the government to agree practical steps to ease trade, particularly with the EU, which remains the UK’s largest trading partner.
Mr Fletcher said the review of the UK-EU Trade and Cooperation Agreement, centred on the EU-UK Summit confirmed for 22 July, should focus on removing non-tariff barriers.
He said it was essential that the summit maintained momentum on removing costly border checks for meat and dairy products.
Logistics UK is also calling for further reductions in trade friction, including action on slow digital border processes.
The organisation said restrictions limiting the number of days HGV drivers and other logistics workers can spend in the 29 Schengen Area countries should also be addressed.
Logistics UK has continued to call for a comprehensive sanitary and phytosanitary agreement between the UK and EU.
The UK government has previously estimated that an SPS agreement could add £5.1bn a year to the UK economy.
Logistics UK said its own analysis showed such a deal could reduce export costs by up to 5 to 8 percent on affected agri-food goods.
It said this could save £150 to £250 per consignment, a significant sum for groupage operators that pay fees on each smaller shipment combined into a single load.
The business group is also urging the development of a modern digital gateway to streamline border operations.
It said a “Single Trade Window”, designed with the logistics sector and compatible with EU systems, would mean businesses no longer had to submit the same data to multiple government systems.
Logistics UK is also pressing for professional drivers to be exempt from EU travel restrictions.
At present, non-EU nationals are restricted to stays within the Schengen area of up to 90 days in a rolling 180-day period.
The group said HGV drivers carrying out frequent or extended EU runs could quickly use up their allowance, as every day spent in the EU counts towards the limit, including holidays.
Mr Fletcher said the case for reducing friction was clear, given the scale of UK-EU trade.
“More than half of UK-EU goods trade moves via the Short Straits, and the EU accounts for around 40% of UK exports,” he said.
“A targeted effort to reduce trade friction would have a significant and immediate economy-wide impact and drive valuable growth for both economies.”