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The new report, published today by the Centre for Business and Economic Research (CEBR), considers the impact quitting the bloc has had so far in the three-and-a-half months since the end of the transition period on December 31, 2020. Specifically, the analysis looks at the impact on exports and import substitutes, the impact of the early vaccine rollout, and the impact of regulatory and other changes.
In his report, author Douglas McWilliams, the CEBR’s executive deputy chairman, stresses it is “still far too early” to reach a “definitive view” on the basis of two months of trade data.
He says: “Because a significant proportion of the impact of the loss of EU exports will be compensated for by the production of import substitutes, we estimate that the initial negative effect on GDP will be a reduction of about 0.5 percent compared with what might have happened otherwise.
However, he adds: “This does not take account of the impact of faster rollout of vaccines and of new trade and deregulation opportunities that might emerge which could easily more than offset this.
Boris Johnson's UK has outperformed Ursula von der Leyen's EU with its vaccine rollout
Ursula von der Leyen threatened the UK with an export ban last month
“We estimate that the impact of the earlier rollout of the vaccination programme than would have been possible had the UK been in the EU programme will give the UK economy a one-off boost of about two percent in 2021.”
Nevertheless, the report emphasises this is just a one-off boost in one year only, pointing out that by the end of the year, both the UK and the EU are likely to be fully vaccinated - although emerging variants of COVID-19 may require additional vaccination programmes.
Based on the UK’s GP for 2020 - £1.96trillion, according to Statista - the value of the early rollout to the UK’s economy would therefore amount to £3.92billion,if the CEBR forecast is accurate.
Mr McWilliams’ report explains: “The UK has made a success of its vaccine rollout.
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The EU had also made "misleading" statements about AstraZeneca's jab, the report said
“The country was early to finance vaccine R&D and pay for vaccine factories to be built and purchased large amounts of each of the likely vaccines at an early stage.
“It has also, unlike most other countries, both managed a rapid vaccine rollout and also ensured that priority was given to groups at risk.”
While it was possible for the nation to have done that without Brexit, it was less likely, he argues.
In comparison, he suggests the EU has been less successful.
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A member of the public receives a COVID-19 jab in Penrith
A vaccination centre in Northern Ireland
He says: “It first tried to centralise purchasing to beat the vaccine producers down to a low price at a time when the UK was financing them.
“Although the actual signing of the deals with the vaccine companies by the EU was almost simultaneous with the UK, the UK involvement with the vaccine companies was earlier and more cooperative.
Additionally, when it had become clear the UK was making a success of its vaccine programme, the EU had responded with what the report characterises as some “unusual behaviour in various European politicians”.
Specifically, it cites the EU’s rapidly aborted decision to trigger Article 16 of the Northern Ireland protocol allowing it to take unilateral action, its threat to impose an export ban on vaccines and “misleading statements” about AstraZeneca’s jab.
Global coronavirus figures
However, it adds: “Yet despite this, in reality, little has actually happened to change the course of events. Some vaccines exports that were to destined for Australia have been banned but the UK has made this up from its surplus of vaccines.
“The UK has not been seriously impeded, while the vaccine roll out in the EU may have been hindered more by increased fears about the dangers of the vaccine.
“Despite this, EU vaccination programmes do now seem to have been accelerated.”
Meanwhile, the UK’s faster and better-targeted rollout of vaccine means the UK’s economic recovery post-COVID-19 was starting earlier than in continental Europe, the report says.
The report warns the City of London will be adversely affected
Nevertheless, it warns: “It looks as though Brexit will be ‘harder’ than we had originally assumed after the Trade and Cooperation Deal was signed.
“We are assuming that both exports to and imports from the EU will settle at a level that might be as much as 15 percent 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 percent.”