UK exports to EU slump as Brexit hits trade

Britain’s exports to the EU slumped more than 40 per cent in January, highlighting the serious impact of Brexit on UK trade with the bloc.

In the same month, imports from the EU fell 28.8 per cent compared with December, the Office for National Statistics said on Friday.

The combined monthly decline in Britain’s exports and imports was the largest since comparable records began in 1997.

The shock figures will undermine ministers’ claims that the imposition of Brexit border controls was merely causing teething problems, although some of the declines were the result of stockpiling by companies ahead of the UK’s withdrawal from the trading bloc at the start of 2021.

The biggest declines in imports from the EU were in cars and pharmaceutical products. 

Separate data released on Friday showed the UK economy shrank in January at the fastest rate since last spring, as the latest lockdown measures forced many businesses as well as schools to close.

UK output fell 2.9 per cent in the month compared with December, the largest contraction since the drop in April 2020 during the first coronavirus lockdown, according to ONS data.

This was less steep than the 4.9 per cent fall forecast by economists polled by Reuters.

Output was 9 per cent lower than in February 2020, before the UK’s first lockdown, demonstrating the impact of nearly one year of Covid-19 restrictions on the economy.

Services were the worst-performing sector, with output falling 3.5 per cent in January compared with the previous month. The services sector accounts for about 80 per cent of the economy and includes businesses such as non-essential stores, bars and restaurants that were closed except for collections and deliveries.

Factories remained open but manufacturing output fell 2.5 per cent over the same period, its first contraction since April. Output in construction rose 0.9 per cent.

Last week, the Office for Budget Responsibility, the UK fiscal watchdog, said it expected the economy to regain its pre-pandemic size in the third quarter of 2022, earlier than previously forecast, as it assumed a rapid rebound as the economy reopens.

The UK is one of the few countries that produces monthly GDP data. Quarterly figures showed that at the end of last year, the UK was performing worse than many similar economies.