With British companies struggling with the new terms of trade following Brexit, the exports of the country collapsed in January.
In the in its first month that it was completely outside the bloc, the United Kingdom reported a drop of 41 per cent in exports in January compared to the December 2020 and exported goods worthy £8.1 billion ($11.3 billion) to the European Union, showed data from the Office for National Statistics. The fall in trade is also similar when compared to January of 2020, showed ONS data.
There was also a 29 per cent fall in imports from the EU at £16.2 billion ($22.6 billion) in January when compared to the previous month of December 2020 as British companies rushed to stockpile goods in the last month of prior to the setting in of Brexit in the last month of the transition period. Trade in gold and other precious metals is not included in the import and export figures.
The ONS said that the largest monthly declines in Britain’s overall goods imports and exports since 1997 resulted because of the drip in trading with its largest trading partner – the EU.
“The January data on UK trade paint a clear picture: while the free trade agreement for goods that the UK and EU signed late last year has mostly brought an end to four and a half years of uncertainty, it does not hold a candle to free trade without paperwork and other non-tariff barriers that the UK once enjoyed as part of the single market,” said Kallum Pickering, a senior economist at Berenberg.
British exporters have had to deal with new border checks and customs processes that have caused delays ion shipment of goods to the EU since the United Kingdom completed its departure from the European Union on December 31.
There has been criticism from business groups of the British Prime Minister Boris Johnson describing the border issues as “teething problems”.
“External evidence suggests some of the slower trade for goods in early January 2021 could be attributable to disruption caused by the end of the transition period,” the ONS said in a statement and added that at the end of January, there was an increase in importing and exporting.
While urging caution while comparing the report to recent data, the ONS said that the trade data has “not been typical in recent months”. Economic activity was also hit at the beginning of January as the United Kingdom went into a new national coronavirus lockdown.
There was 2.9 per cent month on month reduction in UK’s GDP in January after expanding in December, showed ONS data. The GDP however was 9 per cent lower compared to the figure in February last year just before UK got hit by the Covid-19 pandemic. The ONS data showed that while manufacturing dropped for the first time in January since April 2020, services sector was the primary drag on the GDP.
(Adapted from CNN.com)