International

Exports to EU plunge by £5.6bn in first month since Brexit

Exports of UK goods to the EU plunged by 40.7% in January during the first month since Brexit and the toughest Covid lockdown since the first wave of the pandemic, driving the biggest monthly decline in British trade for more than 20 years.

In the first month since leaving the EU on terms agreed by Boris Johnson’s government, the Office for National Statistics said goods exports to the bloc fell by £5.6bn, as imports fell by 28.8%, or £6.6bn.

After stockpiling and disruption at UK borders in the run-up to the Brexit transition, the decline also came as the economy shrank the most in January since the first wave of the pandemic, with gross domestic product (GDP) falling 2.9% from the level in December.

The ONS said the global decline in imports and exports of about a fifth, driven by falling trade with the EU – the UK’s single biggest trading partner – contributed to the worst monthly performance since records began in 1997.

Although January’s GDP figure represents the biggest economic contraction since the first lockdown almost a year ago, analysts had forecast a bigger decline of 4.9%, suggesting that businesses and households adapted better to harsh restrictions than during the first wave of the pandemic, when GDP fell by more than 20% in April 2020.

Experts said the scale of the decline in January trade was unlikely to be permanent because there was evidence companies stockpiled goods before the Brexit deadline, meaning they would not need to send as many shipments as usual in January.

The closure of shops during the Covid-19 lockdown also reduced demand for shipments of clothing, while car production fell and exports were weak to EU countries with coronavirus restrictions.

However, although the government has admitted that “teething problems” at the start of the new relationship have affected cross-border trade, business leaders are warning that lengthier delivery times and higher costs are likely to remain as an endemic feature of Brexit.

Guardian business email sign-up

The government on Thursday was forced to delay the introduction of further post-Brexit import checks by six months – a U-turn because a network of 30 border posts being built to process incoming goods would not have been ready on time.

A government spokesman said a “unique combination of factors” including Covid lockdowns across Europe, stockpiling last year and business adjusting to the new trade relationship made it inevitable that exports to the EU would fall in January.

“This data does not reflect the overall EU–UK trading relationship post Brexit and, thanks to the hard work of hauliers and traders, overall freight volumes between the UK and the EU have been back to their normal levels since the start of February,” he said.

“Many businesses have adapted well, and our focus now is on making sure that any business that is still facing challenges gets the support they need to trade effectively with the EU.”

Source: Exports to EU plunge by £5.6bn in first month since Brexit

Back to top button