Chart of the Day
The OBR's Brexit analysis assumed that the UK's global exports and imports, and hence the "trade intensity" of the economy, will be 15% lower in the long run than if the UK had remained in the EU.
Here's what has actually happened, with the EU added for comparison... 🤔
My takeaways...
1⃣ in reality, the trade intensity of the UK economy has barely changed since Brexit (whether you start the clock in 2016, or later) and the trend looks much the same as most other countries (as well as the EU as a whole).
2⃣ at most, the UK's trade intensity could be a few percentage points lower than it might otherwise have been, but this is unlikely to have any significant impact on productivity or growth in an advanced and still highly open economy.
3⃣ even then, there may be other (non-Brexit) factors affecting trade, and especially exports, such as the UK's relatively high energy costs.
4⃣ if it wants to keep the 15%, the OBR will therefore have to claim that it is still too soon to judge the "long-run" impact of Brexit on the UK's trade intensity (even though the OBR's own forecasts out to 2030 only have a small fall from here), or that the UK's trade intensity would now be much higher somehow if Britain were still in the EU (even though no comparable country has seen a big increase since the UK left).
5⃣ in my view, the OBR should not be afraid to drop the 15% assumption. Just like the "4%" hit to long-run productivity, it was only ever an average of a number of external studies, most undertaken well before the final shape of the Brexit deal was known.
6⃣ at the very least, people should stop citing the OBR's numbers as gospel!
ps. these numbers cover both goods and services (as did the OBR's). You can find the trade intensity data for any country you like here...
data.worldbank.org/indicator…