A new report by Cebr has looked at the impact of Brexit on the UK economy this year, how it is affecting trade between the UK and the EU, and also how it is impacting the City of London.

The author of the report, Douglas McWilliams, executive deputy chairman at Cebr, says: “It is still far too early to reach a definitive view on the basis of two months of trade data about how Brexit is likely to work out. But there are some hints from the data and the diplomatic developments so far and we have tried to analyse them to see what they tell us.”

McWilliams says that it looks as though Brexit will be ‘harder’ than originally assumed when the Trade and Cooperation Deal was signed. He elaborates: “We are assuming that both exports to and imports from the EU will settle at a level that might be as much as 15% lower than would have been the case had Brexit not occurred. Some of the reduced imports will be replaced by imports from other sources.

“The City’s activities will be initially hit by the movement of some activities elsewhere with an estimated loss of activity of about 10%. Our modelling suggests that only a third of this will move to other EU financial centres, the rest moving away from Europe or lost as a result of reduced economies of scale and scope. But this loss could be easily compensated for (our estimates are that the potential gain is twice the potential loss) by achieving the right post-Brexit deals.”

Other sectors, like tourism, are still hard to assess due to the massive negative impact inflicted by the pandemic. However, the effect on the UK’s critically important Flat White Economy should mainly be through the impact on its labour force. If the sector can still attract sufficient skills both from the EU and elsewhere it may survive Brexit relatively unaffected, according to the report.