The UK is losing up to £6.5 billion every year in exports to the European Union due to trade barriers that have arisen since Brexit, according to a new report from the IPPR thinktank. These barriers include additional checks, paperwork, and product testing that UK companies must undergo when exporting to the EU, which would not be necessary if there were a mutual recognition agreement (MRA). An MRA would allow the UK and EU to recognize each other’s product standards and testing, reducing costs and bureaucracy. The report estimates that since 2021, the lack of such an agreement has cost UK exporters between £3.7 billion and £6.5 billion annually. This loss is equivalent to about 0.18% of the UK's total national income and is roughly three times the expected economic benefit from the UK’s trade deal with countries like Japan, Canada, and Australia. At the Liberal Democrat conference this week, party leader Ed Davey proposed that if his party were to form the next government, it would seek to rejoin the EU’s single market and customs union. He argued that this would align the UK more closely with its biggest trading partner and help boost exports and economic growth. Earlier this year, the Labour government under Keir Starmer proposed creating a single market for goods between the UK and the EU, but the idea was rejected by EU officials. While the EU expressed a desire for closer cooperation with the UK, it insisted that any new arrangements must align with key EU principles, including not selectively adopting EU policies. The IPPR report suggests that a dynamic alignment approach—where the UK keeps its product rules in line with the EU—could help reduce trade barriers. Under this model, UK and EU authorities would recognize each other’s product assessments, cutting costs and uncertainty for businesses. The report highlights that three key industries—motor vehicles, electronics, and pharmaceuticals—are most affected by the loss of trade. For example, motor vehicle and parts exports could have been £2.48 billion to £3.42 billion higher annually, while electronic exports might have seen an increase of £1.17 billion to £1.67 billion, and pharmaceutical exports could have grown by £740 million to £820 million each year. The report underscores the significant trade opportunities lost due to regulatory barriers since Brexit, offering one of the clearest pathways to easing tensions between the UK and the EU. Joseph Sassoon, an economist at IPPR and co-author of the report, emphasized that this is the first attempt to isolate the impact of Brexit on trade from other factors like the pandemic, global supply chain shifts, or energy price shocks. The findings show that the absence of an MRA has had a large and statistically significant effect on UK exports, reinforcing the need for clearer and more cooperative trade arrangements between the UK and the EU.