Business

Exports to EU plunged 41 per cent in January as Brexit transition period ended

Exports from the UK to the EU plunged by 41 per cent in January

EXPORTS of UK goods to the European Union dropped by more than two-fifths in January as the Brexit transition period came to an end.

New figures from the Office for National Statistics (ONS) show that overall goods exports from the UK fell by £5.3 billion - 19.3 per cent.

It was driven by a £5.6 billion, or 40.7 per cent, plunge in exports of goods to the EU, the ONS said.

Imports also fell, by £8.9 billion overall (21.6 per cent), while imports from the EU dropped £6.6 billion (28 per cent), the figures show.

The falls in imports and exports are the largest since records began in 1997, the ONS said, as a £200 million - 1.7 per cent - increase in non-EU exports failed to make up for the decline within the bloc.

British Chambers of Commerce (BCC) head of economics Suren Thiru said: "While changes in data collection limit historic comparisons, the significant slump in UK exports of goods to the EU, particularly compared to non-EU trade, provides an ominous indication of the damage being done to post-Brexit trade with the EU by the current border disruption.

"The practical difficulties faced by businesses on the ground go well beyond just teething problems and, with disruption to UK-EU trade flows persisting, trade is likely to be a drag on UK economic growth in the first quarter of 2021."

The end of the transition period coincided with the spread of a new strain of Covid-19 in the UK, causing lorry drivers to need tests to cross the border at the English Channel.

Another national lockdown was also imposed at the beginning of the month.

Since then, other measures have shown that trade levels have in part recovered.

A Government spokesman said: "A unique combination of factors, including stockpiling last year, Covid lockdowns across Europe, and businesses adjusting to our new trading relationship, made it inevitable that exports to the EU would be lower this January than last.

"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."

Institute of Directors senior policy adviser Allie Renison said: "The fact that services trade was far less affected and goods exports to non-EU rose marginally all in the same period reflects the particular impact that disruption from new Brexit changes has had."

Labour's Rachel Reeves said: "Businesses have been appealing to the Government to start listening to the problems they've been facing, but they've been left out in the cold.

"The Government must up their ambition here, and take practical action, hand-in-hand with businesses, to build on the limited deal they negotiated with the EU."

Because the value of imports fell more than exports in January, the trade deficit for the month narrowed by £3.7 billion to £1.9 billion.

Companies had been stockpiling ahead of the end of the transition period, and may also have been using their stock instead of buying new goods in January.

This was particularly noticeable in pharmaceuticals, with exports dropping 63 per cent.

UK exports of medicinal and pharmaceutical products to Ireland jumped by 224 per cent in the three months to December, the ONS said.

The export of food and live animals to the EU plummeted by around 64 per cent in January, the figures show, potentially because of strict checks by the EU.

The EU imposed full customs requirements on exports coming from Britain in January. However, the UK decided it did not immediately want to start full controls.

On Thursday, the Government again delayed its plans to introduce full border checks with the EU until early next year, after they were originally planned for July.

The BCC's Mr Thiru added: "Although the postponement of import checks will help avoid exacerbating the current disruption, there must be a greater focus on long-term solutions to improving the flow of UK-EU trade.

"Offering tax credits to support firms to adapt to the new arrangements would help many address new burdens and requirements better."

Imports of services dropped 2 per cent in January, while exports fell 1 per cent.

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