Trade between UK and EU plunges after Brexit, hurting British economy

Photo: AP Britain announced Thursday, March 11, 2021 that it is delaying the imposition of checks on some goods from the European Union to give businesses more time to prepare for new post-Brexit rules.

UK trade with the European Union plunged in January as Britain’s departure from the bloc and widespread coronavirus restrictions dealt a double blow to the nation’s struggling economy, AP reports.

Goods exports to the EU fell 40.7% from a month earlier and imports dropped 28.8%, the Office for National Statistics said Friday. The figures contributed to a 2.9% month-on-month decline in overall economic output.

Britain left the European single market on 1 January, ending almost half a century of free trade and triggering tariffs, increased paperwork and border delays on both sides of the English Channel. While the drop in trade was magnified by stockpiling ahead of the new rules, economists said the scale of the decline reflected the disruption caused by Brexit.

“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,” said Suren Thiru, head of economics for the British Chambers of Commerce. “The practical difficulties faced by businesses on the ground go well beyond just teething problems.”

Overall, Britain’s exports dropped 19.3% and imports fell 21.6%, the biggest monthly declines since records began in 1997, the ONS said. Shipments to non-EU countries increased slightly, and imports from countries outside the bloc declined about 8%.

Prime Minister Boris Johnson has backed Brexit, saying it would allow Britain to regain control of its laws, borders and fisheries, while helping the UK negotiate free-trade deals with countries outside the bloc.

But the EU is Britain’s closest and biggest trading partner, accounting for more than 40% of exports. Brexit critics say it will be very difficult for trade with other countries to counter the impact of increased barriers to trade with the EU.

The government said Friday that the January figures don’t reflect the current state of trade with EU, and overall freight volumes have been back to “normal levels” since the start of February.

”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,” the government said in a statement.

The ONS said preliminary data showed that trade began to improve at the end of January.

“It is too early for a definitive read of the Brexit effect, with some evidence of stockpiling ahead of the deadline and signs of some recovery towards the end of the month indicating that the picture could be rather more positive after the initial dust has settled,” Richard Hunter, head of markets at Interactive Investor, said in a note to clients.

Similar articles

  • China GDP spikes by 18.3% in Q1 2021

    China GDP spikes by 18.3% in Q1 2021

    Chinese economy posted a robust growth in the first three months of this year edging up to 18.3%, AP reported quoting official statistics data. The rapid growth is attributed to a rebound from the pandemic crisis, but overall growth is running out of steam with key sectors like manufacturing seen stable at pre-Covid-19 levels with their advance being bound by several factors including the trade war with US.

  • UK exports to EU return to robust growth

    UK exports to EU return to robust growth

    Trade relations between UK and EU have returned to the fast growth lane in February after the registered January disruption, BBC reported, quoting official statistics data. British exports to the EU jumped by 46.6%,  to £11.6bn, following January's 42% slump when firms struggled with new trade rules related to Brexit. However, the UK Office for National Statistics noted that exports were still below last year's levels and imports from the EU had seen a weaker recovery. Other figures from the ONS showed the UK economy grew by 0.4% in February.

  • Chinese exports rise by 30.6% in March

    Chinese exports rise by 30.6% in March

    Despite the pandemic, the ongoing economic crisis and punitive tariffs, China's exports rose by 30.6% in March compared to the same period last year, marking further strong growth for the country's foreign trade. Customs data released Tuesday also indicated an unexpectedly strong showing for imports, which grew by 38.1%.