Clifford Chance

The 'Red Tape' cost of Brexit

12 March 2018

Brexit outcomes remain uncertain with a wide range of future trading relationships between the EU271 and UK still possible. Most firms remain unsure of the impact Brexit will have on their businesses. Our analysis begins to fill that gap in understanding. In our first report in this series, we have not tried to calculate the full economic impact of Brexit on the UK and EU27 conomies. Rather, we have focused on the direct impacts that will result from new tariff and non-tariff carriers that could be imposed on trade between the UK and EU27 (see note on methodology).

Understanding this initial set of “red tape” costs is essential for firms in their contingency and broader strategic planning. We have partnered with Clifford Chance to estimate these “red tape” costs across every sector of the economy where the EU27 and UK revert to a World Trade Organization (WTO) trading relationship with one another. We have chosen this scenario based on client feedback that this is a useful case for businesses to understand in greater depth. Our modelling assumes sufficient time through a transition period to implement new requirements such as ensuring customs infrastructure is in place. In order to put in context the size of these costs to business we have expressed them as a percentage of Gross Value Added (GVA)2 which is a commonly used measure of economic output by sector. Our report does not make the case for any specific policy options.

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