Iran Press/ Europe: 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, while imports fell by 28.8%, or £6.6bn.
Exports of food and live animals to the EU were the hardest hit by Brexit, collapsing by 63.6% in January. Consignments of fish and shellfish collapsed by 83% from the level a year ago to only £16m.
This reflected heavier disruption and additional checks for consignments from this sector that prompted furious protests from the fishing industry. However, food and live animals account for only 7% of total UK exports.
According to the Guardian, after stockpiling and disruption at UK borders in the run-up to the Brexit transition, the decline also came as the economy in January shrank by the largest amount since the first wave of the pandemic, with the gross domestic product (GDP) falling 2.9% from December, according to the ONS.
The ONS said the January performance was the worst since monthly records began in 1997, as a 1.7% rise in non-EU trade, worth £200m, failed to make up for the plunge in cross-border activity with the UK’s biggest trading partner. Overall, global UK exports and imports fell by about a fifth.
Although January’s GDP figure represents the biggest 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 decline was lower than a 68% plunge reported by road hauliers, while the ONS said there were signs trade had started to pick up at the end of the month.
The closure of shops during the Covid-19 lockdown reduced demand for clothing shipments, car production fell and exports were weak to EU countries as tougher coronavirus restrictions were imposed across the continent.
Alongside stockpiling, Covid disruption and lockdown, the ONS also changed the way it collects export data after Brexit, which could mean it takes longer to record some UK goods shipped to the EU.
The British prime minister’s former chief Brexit negotiator Lord Frost said there was a “unique combination of factors” that meant it was “inevitable that we would see some unusual figures this January”.
Frost, who was elevated last month to become the cabinet minister responsible for Britain’s relationship with the EU, said these effects were now “starting to unwind” and that overall freight volumes had been “back to their normal levels for over a month now”.
However, one economist said Brexit played a decisive role in January and would continue to weigh on growth. “Brexit made a bad situation worse,” said Samuel Tombs, the chief UK economist at the consultancy Pantheon Macroeconomics. “Brexit is best seen as a slow puncture, rather than a sudden blowout, with the costs gradually accumulating in the form of lower investment and immigration than otherwise would have been the case.”
In a reflection of the Brexit impact, UK goods exports to Ireland fell 47% in January, the sharpest fall among main trading partners.
While the government has admitted to “teething problems” at the start of the new relationship, business leaders have warned that lengthier delivery times and higher costs are likely to remain as an endemic feature of Brexit.
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