The UK's short-term approach to trade deals post-Brexit has prioritised 'speed over strategy', according to a new think tank report.
The revelations come from a joint project between the Resolution Foundation and the London School of Economics, funded by the Nuffield Foundation.
Its findings demonstrate that major shifts in the level and nature of openness have big direct impacts on people, places, and firms, but they are also intertwined with the overall economic strategy of the country.
The direct effects of Brexit on trade flows and prices have started to emerge, although the impact has been clouded by the effect of COVID-19.
Trade in goods and services with the EU has fallen by 10-20% relative to non-EU trade with services trade more affected.
The think tank report found that while there is evidence the referendum prompted a reduction in inwards foreign investment transaction and an increase in outward transactions into the EU, foreign investment has not yet fallen as much as expected.
The longer-term impact on the nature of the UK’s economy largely remain ahead of us, the report says.
The research argues that focusing on individual deals presupposes the UK is on a path towards becoming more open, without asking the fundamental question: how open should the economy be?
In turn, any decision on how to approach openness must be informed by the question of whether to maintain the existing economic strategy, or change it?
"Here it is crucial that any change in strategy be grounded in the realities of the world trading system," it says.
The report found that scope for liberalisation beyond the EU is limited by the availability of willing partners, rather than public support. Around three out of four individuals in the UK support the free trade agreements.
A sustainable plan for the UK’s trade policy will need to be embedded within a wider strategy that reconciles the UK’s wish as a smaller open economy to have good relations with the world’s three major trading blocs (US, EU and China), with its ambitions to play an active geo-political leadership role.
The report comes amid a burgeoning supply chain crisis in the UK as post-Brexit border checks have complicated the exchange of goods between the UK and EU.
It also adds to the noise amid protracted negotiations on the nature of the trading relationship between Northern Ireland, the EU and the rest of the UK. On Wednesday, the EU said it would scrap 80% of checks on foods entering Northern Ireland from Britain but Brussels officials were “preparing for the worst”.
Prime minister Boris Johnson is expected to reject the deal.
When the Brexit deal was agreed less than two years ago, the two sides signed up to the Northern Ireland Protocol. That was the part of the deal that aimed to stop checks along the border between Northern Ireland and the Republic of Ireland.
Instead, the trade checks take place when goods arrive into Northern Ireland from Great Britain.
The UK and EU will now hold three weeks of talks to discuss the suggestions.