Featured Post from Aston University

Brexit: UK services are losing out to EU rivals – but Asia could be big winner

Aug 2, 2021

5 min

Jun Du
"Seven months after Britain’s exit from the EU, the chilly effects on UK trade are being felt. Total exports of UK goods and services were down by 13% (£36 billion) and imports down 22% (£66 billion) for January to May 2021 compared to the same period in 2019."
Professor Jun Du, Aston Business School


Singapore looks like one of the big winners from Brexit. joyfull


In a separate new ONS report into UK services, exports and imports fell 12% and 24% in the first quarter of 2021 compared to the same period in 2019. To some extent this is due to the pandemic, but the decline with EU countries was more severe (exports down 15% and imports by 39%), which suggests Brexit was relevant too. The difference between services exports to EU and non-EU countries was particularly marked in sectors like construction (-43% vs +24%), maintenance and repair (-62% vs +11%), and manufacturing services (-40% vs -12%).


It seems to confirm that the UK’s services offering has been made less competitive by the EU-UK Trade and Cooperation Agreement hardly covering such business. This has left EU members free to decide whether to allow different UK providers into their markets. But as we shall see, other services exporting countries outside the EU may also benefit as a result.


In our recent paper, Ireland looked like the big winner. It has probably benefited from firms relocating and business being re-routed from the UK, not to mention low corporation tax and a young well-educated workforce. Between 2016 and 2019, Ireland’s services exports rose 24% (that’s €144 billion or £123 billion), driven by financial services, IT and transport.


Speculation still abounds about which other EU cities will benefit in the medium term. Amsterdam surpassed London as Europe’s largest share-trading centre in January by absorbing much trade in euro-denominated assets, though London has been back on top recently. Other potential winners include Frankfurt (banking), Luxembourg (banking and asset management) and Paris (financial, professional and business services). Even a less serious contender like Berlin can attract tech talents thanks to its culture clusters and affordability.


On the other hand, most financial traders have so far remained in London. The city is still strong in hosting stock market flotations and other forms of capital raising. And the flow of financial jobs out of London has been a fraction of what remainers predicted. A four-year regulatory transition period for areas like data protection and electronic trade will undoubtedly be helping.


London vs EU rivals is only half the story. James Padolsey/Unsplash, CC BY-SA


Yet all this misses a bigger picture, namely that Europe’s ability to provide services may have been weakened overall. Imagine a group of US investors wants to invest £1 billion in European shares and other financial assets. In the past it might have set up a fund in London, making use of the city’s network of lawyers, accountants, bankers and other finance professionals, while filtering some of the work to specialists in, say, Paris and Frankfurt for issues related to France and Germany.


But now Brexit means the fund can’t invest in certain EU securities from London. The investors would have to set up a second fund in, say, Dublin to get exposure to all the EU assets they want. The additional expense and time involved makes them decide it will be more lucrative to set up an Asia-focused fund in Singapore instead.


When you multiply this effect across every sector, it is potentially huge. Certainly some investors will decide to either switch attention from the UK to EU countries, or to live with the extra cost of doing business across both the UK and EU. But others are deciding that an opportunity somewhere else in the world now looks more attractive. The danger is that this adds up to a global shift in economic weight over time. In fact, we could be seeing signs of this already.


Winners and losers


In follow-on research that we have yet to publish, we have been analysing the services exports of the major service providers in Europe and globally, using trade data jointly collected by the World Trade Organization (WTO) and the Organisation for Economic Cooperation and Development (OECD).


The data shows the UK was and is the biggest services exporter in Europe and second only to the US worldwide, but appears to have been losing ground since Brexit. Ireland and the Netherlands are the major growth stories in Europe, while China, India and Singapore are leading the way elsewhere.


Services exports by country, 2019 vs 2015


Trends in services exports. Left: 2015 data in solid coloured bars; 2019 change in yellow markers. Right: Green bars represent accelerating service growth; red bars represent decelerating growth. BaTIS


The UK’s services growth trend fell 11% in the 2016-2019 period compared to 2010-15. This backs up our recent published research finding that the UK’s global share of exported services fell from 8.9% in 2005 to 7% in 2019.


Meanwhile, France, Spain, Italy and Belgium’s growth has also been declining, while Germany, the Netherlands, Switzerland, Luxembourg, Austria and also the US were static. Ireland was the fastest growing services exporter among all, but Singapore and India gained momentum too.


Strikingly, we see increasing growth in Asia between 2016 and 2019 in sectors like travel, financial, IT and creative services. This includes extraordinary growth in Singapore in finance, business, insurance and pension provision, and also in China in numerous segments. It looks like nothing short of a boom.


Shanghai has been on the up and up. Krzystsztof Kotkowicz, CC BY-SA


This may partly reflect the industrial transformation taking place in the Asian developing world from manufacturing to services. It may also capture a long-term shift of services centres from the west to the east – a reshuffle on a truly global scale.


But at the same time, it’s evidence that Brexit has weakened the UK as the European centre for services. Yes, business shifted to Ireland (and Luxembourg) to some extent, but that could be hiding a wider collective setback.


The question for the years ahead, for the UK and its European services peers, is whether they can come up with arrangements that help maintain their collective strengths – and to what extent they can exploit opportunities elsewhere, particularly on developing countries, where US services providers have traditionally been far ahead.


This article was co-written by Professor Jun Du and Dr Oleksandr Shepotylo.


Connect with:
Jun Du

Jun Du

Professor of Economics

Professor Du's main research interest is to understand the driving forces and impediments of productivity enhancement and economic growth.

EconomicsTrade
Powered by

You might also like...

Check out some other posts from Aston University

The world is burning useful waste, and cleaner alternatives are needed featured image

4 min

The world is burning useful waste, and cleaner alternatives are needed

When we talk about clean air, the conversation usually turns to traffic: exhaust fumes, congestion, school runs and the air people breathe on busy streets. That focus is understandable because road transport remains one of the most visible sources of poor air quality in everyday life. But Clean Air Day should also draw attention to a less visible question: why are useful materials still being burned as waste? Clean air is about more than traffic Around the world, huge quantities of leftover straw are still treated as waste to be cleared quickly, with rice straw one of the clearest examples. More than 700 million tonnes of rice straw are produced globally every year, and around 80% is burned. That contributes directly to air pollution and greenhouse gas emissions, while also destroying material that could have value. At Aston University’s Energy and Bioproducts Research Institute, researchers are exploring alternatives to open burning of crop residues, including whether materials often treated as waste could instead become useful sources of energy, fuels or bioproducts. This matters because the clean air debate needs to look beyond transport. How we manage waste, land and energy also plays a part, and agricultural residues should not automatically be seen as rubbish to be burned. In many cases, they could be resources with real value. Why burning crop waste matters The World Health Organization describes air pollution as one of the greatest environmental risks to health, estimating that ambient outdoor air pollution caused 4.2 million premature deaths globally in 2019. Much of that risk comes from exposure to fine particulate matter, which is linked to cardiovascular and respiratory disease and cancers. That is particularly relevant when residues are burned in the open, as smoke and fine particles can travel beyond the field where burning takes place, affecting nearby communities and wider air quality. There is a practical issue as well as an environmental one. If burning is the fastest and cheapest way to clear land, it can easily become the default, which is why any cleaner alternative has to work for farmers and communities in practice. It is not enough to tell people to stop burning; they need practical alternatives that make sense economically and locally. Turning waste into cleaner alternatives Biochar and bioenergy are two examples of how waste crop material can be treated differently. Instead of being burned in the open, residues can be converted into useful products or sources of renewable energy. Biochar can also offer practical benefits for farmers when it is produced and applied appropriately. Studies have shown that addition of biochar to the soil can improve its structure, help retain nutrients and, in some cases, reduce the need for synthetic fertilisers, which will lower associated emissions and economic demands. The water-holding capacity of biochar can also support crops during dry periods, potentially reducing irrigation demand in drought-prone seasons. Work connected to rice straw has shown that cleaner alternatives to burning can produce measurable environmental benefits while supporting local economies. Community-scale rice straw bioenergy systems, for example, can avoid 2.7–3.5 tonnes of CO₂ equivalent emissions per hectare each year, while creating fuel savings and reducing post-harvest losses for rice farming communities. Research and interviews have shown that farmers and local stakeholders are willing to participate in these transitions when alternatives are designed around their needs and priorities. During community engagement activities, participants consistently highlighted cleaner air as an important benefit, not only for environmental reasons but also because of concerns about the health impacts of smoke and the financial burden of illness. For many households, avoiding respiratory problems and expensive hospital bills was seen as just as important as generating additional income from agricultural residues. That matters because cleaner air is linked to more than one policy area. Transport is important, but so are farming, energy and waste. Research can help identify what works, where the trade-offs are, and how promising ideas can move beyond the lab. It can also support industry, policymakers and local partners to develop alternatives that are practical rather than theoretical. For policymakers, the lesson is that air quality cannot be improved by focusing only on the most visible sources of pollution. Transport matters, but so do homes, industry, farming, waste and energy systems. There is no single answer. Agricultural residues vary, local conditions vary, and technologies need to be assessed carefully, but cleaner air will require better options than burning. Clean Air Day should prompt us to ask why useful materials are still being burned in the first place. If we want cleaner air, we need to reduce what we burn and get smarter about what we waste. This article was written by Dr Samuel Sogbesan and Thea Mae Baltazar from Aston University’s Energy and Bioproducts Research Institute. (Photo by Sandie Peters on Unsplash)

Major trial shows increasing bone density fails to cut fracture risk in brittle bone disease featured image

3 min

Major trial shows increasing bone density fails to cut fracture risk in brittle bone disease

An international clinical trial involving Aston University researchers has challenged long held assumptions about how brittle bone disease is treated in adults, after finding that substantially increasing bone density did not reduce the risk of fractures. The study, published in the Journal of the American Medical Association (JAMA), examined whether a two stage treatment using the bone building drug teriparatide followed by the bone preserving drug zoledronic acid could reduce fractures in adults with osteogenesis imperfecta, often referred to as brittle bone disease, a rare genetic condition that causes bones to break easily throughout life. Researchers followed 349 adults treated at 27 specialist centres across the UK and Europe. While the treatment led to clear increases in bone density in the spine and hip, fracture rates were no lower than among patients receiving standard care, suggesting that bone quality may matter more than bone density alone in preventing fractures in people with the condition. The findings underline a key distinction between brittle bone disease and more common bone conditions such as osteoporosis, where increasing bone density is known to reduce fracture risk. In osteogenesis imperfecta, the study suggests that bones can become denser without becoming less likely to break, indicating that the underlying quality and structure of bone tissue may play a greater role in fracture risk than density alone. Dr Zaki Hassan Smith, an endocrinologist at Aston Medical School who contributed to the research, said: “This study shows that in osteogenesis imperfecta, simply increasing bone density doesn’t necessarily translate into fewer fractures. That’s important, because it tells us that the disease is more complex than what we see on a scan. The findings help shift the focus towards understanding bone quality and how bones behave in real life, which is essential if we are to develop more effective treatments that genuinely reduce harm for patients.” Osteogenesis imperfecta is a genetic condition that affects collagen, leaving bones fragile and prone to fracture throughout life. There is currently no licensed treatment specifically approved to prevent fractures in adults with the condition, and patients often experience repeated fractures, chronic pain and long term disability. The trial tested a sequential treatment strategy commonly used in osteoporosis, where a bone building drug is followed by a treatment designed to preserve gains in bone strength. Although this approach successfully increased bone density in people with osteogenesis imperfecta, it did not reduce fracture rates, suggesting that treatment strategies effective in osteoporosis may not directly translate to rare bone diseases. Researchers did observe improvements in some quality of life measures among participants receiving the treatment, including reduced pain interference and improved mobility. However, fracture prevention remained unchanged, reinforcing the need for new approaches that target the fundamental properties of bone in osteogenesis imperfecta rather than density alone. The study was led by the University of Edinburgh and funded by the Medical Research Council and the National Institute for Health and Care Research. Aston University contributed clinical and academic expertise through Aston Medical School as part of the large international collaboration, which involved specialist centres across the UK and Europe. The study was led by the University of Edinburgh, with Aston University contributing clinical and academic expertise as part of a wider international collaboration involving multiple specialist centres across the UK and Europe. The research was funded by the Medical Research Council and the National Institute for Health and Care Research. Researchers say the findings provide important guidance for future research, helping to steer efforts towards treatments that focus on bone quality, strength and resilience in everyday life. They also highlight the value of large scale clinical trials in rare diseases, where learning what does not reduce harm is an essential step towards better care. The paper, Teriparatide Plus Zoledronic Acid for Osteogenesis Imperfecta, is published in JAMA. https://doi.org/10.1001/jama.2026.6889

Why disaster recovery in the Himalayas needs a rethink featured image

3 min

Why disaster recovery in the Himalayas needs a rethink

After five weeks of fieldwork across Nepal, Bhutan and Northwest India, Aston University researcher Dr Komal Raj Aryal is calling for a more locally grounded approach to resilience and post-disaster recovery in one of the world’s most hazard-prone regions. What happens after the headlines fade from a disaster? That question sits at the heart of new field research led by Dr Komal Raj Aryal, Lecturer in Crisis and Disaster Management at Aston Business School. After returning from a five-week research visit across Nepal, Bhutan and Northwest India, Dr Aryal says the evidence points to a troubling reality: many communities remain highly vulnerable long after major recovery programmes are supposed to have helped them rebuild. The trip brought together field visits, stakeholder consultations and community observations linked to ongoing UKRI, NERC and ISPF-supported research on earthquake risk, disaster governance, resilience and post-disaster recovery in the Himalayan region. The aim was not only to understand current conditions, but to ask why repeated losses continue despite years of international development assistance, scientific research and investment. Across the region, the research found that resilience is being undermined by a combination of persistent governance challenges, fragmented institutions, weak local preparedness systems, livelihood insecurity and mounting environmental pressures. In other words, recovery is not simply about rebuilding infrastructure; it is about whether communities are genuinely better equipped to cope with the next shock. This challenge is especially striking in places still living with the legacy of the 2015 Nepal earthquakes, where long-term vulnerabilities remain visible despite the scale of international support directed towards recovery and reconstruction. Reflecting on his findings, Dr Aryal said: “One of the most striking observations from the field is that many communities affected by the 2015 Nepal Earthquakes continue to face similar vulnerabilities today, despite significant international support allocated for recovery and reconstruction. This raises important questions about how disaster recovery is planned, implemented, and sustained over time.” The fieldwork also highlighted the growing complexity of future disaster risks in the Himalayas. Large-scale earthquakes do not exist in isolation; they interact with environmental degradation, cascading hazards, climate-related stresses and rapid urbanisation in fragile mountain settings. He added: “The Himalayan region is entering a period of growing uncertainty where environmental change, socio-economic inequality, weak governance systems, and seismic risks are becoming increasingly interconnected. There is an urgent need to rethink conventional development approaches and invest more seriously in locally grounded, community-centred resilience strategies.” For Aston University, this work reflects a broader commitment to international research on disaster risk reduction, resilience governance and humanitarian response across South Asia. Aston researchers are working with government agencies, local authorities, universities, emergency responders and humanitarian organisations to strengthen evidence-based approaches to preparedness and recovery. The findings feed into wider international debates about sustainable development, climate resilience, risk communication and the future of disaster governance in vulnerable mountain regions. They also underline the importance of moving beyond short-term recovery models towards approaches that are participatory, practical and rooted in local knowledge. Dr Aryal’s research emphasises the value of integrating community knowledge, participatory governance, youth engagement and long-term livelihood security into resilience planning. As future collaborations and policy discussions develop, these themes are likely to be central to how the region prepares for the risks ahead. The recent fieldwork is expected to inform future international research partnerships, policy dialogue and resilience-focused initiatives between the UK and South Asian partners.

View all posts
Powered by