Taking stock of the post-Brexit UK economy

The UK economy presents a mixed p ost-Brexit picture. Latest data point to a clear adverse effect on trade from leaving the single market . At the same time, the fast progress in vaccinations will allow lockdown measures to be eased soon , which is likely to prompt a strong re-acceleration of growth in the coming quarters . Part of the Brexit related disruption, as reflected in the current trade data , is transitory and we expect some normalization in trade with the EU going forward. But there is also a permanent price to be paid and t he hurdles for trade Brexit has introduced will lead to a lower degree of integration into European value chains. More important in this context is the continuing uncertainty how stable the Trade and Co-operation A greement between the UK and the EU is in the end. T he current conflict regarding the extension of transitory rules concerning trade between Northern-Ireland and the rest of the UK shows , that there is sufficient potential for conflict , that may put the whole Brexit deal into question. It is this lingering uncertainty, which has not gotten smaller since the transition period ended December 31 st , that is likely to weigh on business investment in the future.