EU trade data after Brexit: figures for January 2021

The UK’s first series of official trade data since leaving the European Union highlights the earlier damage caused by the flow of goods through Brexit.

The numbers show a sharp decline in shipments to and from the EU in January, the first month after the transition period ended. Exports to the 27-nation bloc fell nearly 38 percent year-on-year, while imports fell nearly 16 percent, according to figures from the Office for National Statistics released Friday. Compared to December, exports fell by 41% and by 29%.

According to Smith, the ING economist, there is little doubt that some of the damage is to blame for Brexit. “Some things have probably improved in the weeks since” January, “he says. “But there are also signs that businesses are still struggling.”

Prime Minister Boris Johnson insists that friction in cross-border trade was merely ‘dental problems’, and the added tension of the pandemic is the distortion of trade. The big question you need to ask over the course of the year is whether these temporary shocks are becoming more lasting trends.

One problem in determining the cause of the deterioration is to separate the impact of coronavirus locks from new border rules due to Brexit. The comparison of British trade flows with the EU with those of countries outside the bloc sheds some light on the issue.

January may also not be a good indicator for the rest of 2021, partly because the economy is largely closed. Many companies were also still working on stockpiles built up late last year in anticipation of new arrangements for confidence. Others had not yet recovered from the chaos in the port of Dover before Christmas, when France blocked the UK’s journey to halt the spread of a mutant type of virus.

What is clear: Experts anticipate the instability to continue for months, with obstacles to Brexit exacerbating matters.

The British government recently announced that the implementation of health tests on food imports from the EU will be postponed from April to next January. While this will help prevent empty shelves at supermarkets, British exporters say they expect trade unrest to continue as the EU imposes checks since 1 January.

Other industry sectors to look for signs of residual headaches: exporting cars, fish and clothing.

The EU has traditionally been the UK’s main partner for trade in goods, but the unbundling of the bloc has caused a downward trend for UK exports to the EU. In January, EU share fell to 36%, a new low since November 2019 and the lowest point in the last 11 years. Most months, more than half of all UK imports come from the EU, but in January the share accounted for just over 50%.

Monitoring the changing composition of British trade with the EU and the rest of the world will be the key to understanding if the government’s campaign for a ‘Global Britain’ works.

David Frost, who negotiated the Brexit trade agreement with the EU and is now the minister responsible for the UK’s relations with the bloc, said it was inevitable that the figures would be ‘unusual’ in January. “Many companies have made the necessary changes to trade effectively with the EU, but we focus on providing active and comprehensive support to others who need to adapt,” he added.