UK Losing Up to £6.5bn a Year in EU Trade Over Mismatched Product Rules, Think Tank Finds

Britain is losing out on as much as £6.5bn a year in exports to the European Union because it lacks a deal with Brussels allowing manufacturers to avoid duplicating product testing, according to new analysis from the IPPR think tank reported by the Guardian.

The report represents the latest attempt to calculate the scale of trade lost with the EU since Brexit, and it finds that many UK companies have either stopped selling into the EU market altogether or set up subsidiaries inside the bloc, in both cases to avoid the administrative burden created by successive governments' failure to secure a mutual recognition agreement on product testing.

The IPPR's estimate puts the annual cost at roughly 0.18% of UK national income. Broken down by sector, the think tank found motor vehicle and parts exports would have been between £2.48bn and £3.42bn higher each year had such a deal been in place, while electronic goods exports could have been between £1.17bn and £1.67bn higher. Pharmaceutical exports, the report estimated, would have seen an annual uplift of between £740m and £820m.

The absence of a mutual recognition agreement means UK-made goods often must undergo separate testing and certification processes to be sold in the EU, even when they already meet equivalent UK standards, adding cost and complexity that the IPPR argues has pushed some firms out of the EU market entirely.

The findings add to a broader body of research examining the economic effects of the UK's departure from the EU single market, as policymakers continue to weigh options for reducing trade frictions with Britain's largest trading partner.