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UK goods exports to the EU plummeted 40.7% in January during the first month since Brexit and the toughest Covid shutdown since the first wave of the pandemic, triggering the biggest monthly drop in trade. British in more than 20 years.
In the first month since leaving the EU on terms agreed by the Boris Johnson government, the Office for National Statistics said exports of goods to the bloc fell by £ 5.6bn, while imports fell by 28.8%, or £ 6.6 billion.
After storage and disruption at UK borders in the run-up to the Brexit transition, the decline also came as the economy contracted further in January since the first wave of the pandemic, with a gross domestic product (GDP ) falling 2.9% from the level in December.
The ONS said the global decline in imports and exports of around a fifth, driven by falling trade with the EU, the UK’s biggest trading partner, contributed to the worst monthly performance since records began in 1997.
Although the GDP figure for January represents the largest economic contraction since the first lockdown almost a year ago, analysts had forecast a larger drop of 4.9%, suggesting that businesses and households better adapted to the 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 January trade decline was unlikely to be permanent because there was evidence that companies were stocking goods ahead of the Brexit deadline, meaning they wouldn’t need to ship as many shipments as usual in January.
Store closures during the Covid-19 shutdown also reduced demand for clothing shipments, while car production fell and exports were weak to EU countries with coronavirus restrictions.
However, while the government has admitted that “initial problems” at the beginning of the new relationship have affected cross-border trade, business leaders caution that longer delivery times and higher costs are likely to remain an endemic feature. of Brexit.
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On Thursday, the government was forced to delay introducing more post-Brexit import controls by six months, a U-turn because a network of 30 border posts being built to process incoming goods would not have been ready in time.
A government spokesman said a “unique combination of factors” – including Covid lockdowns in Europe, warehousing last year and business adjustment 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 trade relationship after Brexit and, thanks to hard work by carriers and traders, overall UK-EU freight volumes have returned to normal levels since early February “. he said.
“Many companies have adapted well, and our goal now is to make sure that any company still facing challenges gets the support it needs to do business effectively with the EU.”
