Qatar National Bank (QNB) confirmed that the new border barriers represented by customs and non-tariff barriers, regulatory controls, additional administrative costs, and the volatility of economic policies are among the most important obstacles faced by companies, pointing out that these global trade restrictions negatively affect economic growth.
“Tariff and non-tariff barriers, additional regulations, administrative costs, and other economic disputes lead to misallocation of capital, which leads to lower growth and productivity,” the bank said in its weekly report, especially since international trade provides countries with access to goods and services, and provides Comparative advantages that enhance productivity, efficiency, pricing and general economic growth, pointing out that global trade activity is a traditional indicator of sound macroeconomic conditions and trends, and the increase in flows of goods and services is usually associated with productivity growth and prosperity.
The report added: Global trade reached its peak before the global financial crisis, but the recent geopolitical tensions between America and China, and their repercussions on other regions and countries, generate a state of economic uncertainty in various parts of the world, and this negatively affects trade, supply chains, and investment flows.
He pointed out that major events and shocks have disrupted the global economy in recent years, and based his judgment on that, on a study of the case of Britain’s exit from the European Union, to know the role played by “economic disintegration” in its poor performance, as there is increasing evidence indicating that the process, which began By voting to leave the union, she had an important role in that.
The official monthly estimate of gross domestic product shows that British economic activity has grown 0.3% since the start of 2022, which is 0.4% lower than pre-pandemic levels.
In contrast, annual growth was much higher in the five-year period from 2011 to 2015, which preceded the exit referendum in 2016, as the average annual growth during that period was 2.2 percent. The Europeans, who are the three largest economies in the Union (Germany, France, and Italy), have achieved GDP growth rates in the pre-pandemic period of 1.2%.
In mid-2016, during the referendum, the contribution of trade openness in the United Kingdom amounted to 60.5% of GDP, which was 6.5 percentage points lower than the previously recorded average of 67% for European counterparts. In 2022, the difference doubled to 13.3 percentage points, which indicates that the British economy has become less open.
Given the importance of global value chains, the decline in trade openness will affect trade with all partners, not just the Europeans, as intermediate goods and services represent most of the trade in advanced economies, and account for two-thirds of the volume of trade exchange between the European Union and the United Kingdom. Increasing trade obstacles also affect the costs of foreign supplies, reduce the competitiveness of Britain’s products, and undermine the ability of companies to participate in global value chains.
Accordingly, these consequences will take time to show their full effect, as the analysis conducted by the Office for Budget Responsibility “a government agency” indicates that Britain’s exit from the Union will reduce trade openness by 15% in the long term, widening the current difference of 13.3% with the Kingdom’s counterparts. the United States in the euro area.
The report believes that the uncertainty that resulted from the exit process from the union and the loss of access to the European single market has also affected commercial investment, as its level has remained in stagnation unchanged since the referendum, which led to a decline in Britain’s performance against its counterparts in the euro area, as it indicates The most conservative estimates indicate that the negative impact of exit on the investment level is 10%, and some estimates reach 23%, which confirms that its impact was significant on capital stock and long-term growth, even under the most optimistic scenarios.
Changes in foreign direct investment are partly due to developments in total investment. In addition to the importance of this investment for growth and productivity, it also reflects the extent to which the UK’s attractiveness has evolved over time. Foreign direct was £2.3 trillion, more than half of which came from the European Union. More recently, during the 2017/21 post-Brexit period, Britain fell behind France and Germany, in terms of inflows, as a proportion of GDP.
The bank’s report concluded that the United Kingdom continues to achieve substandard economic performance years after its decision to leave the European Union, and attributed this to the negative impact of the new trade restrictions.
