UK exports to the European Union dropped by almost 41% in January as the Brexit transition period commenced, official statistics revealed today.
UK exports to the EU decreased by £5.6 billion in January according to the Office for National Statistics. Imports from the EU also dropped by nearly 29%, compared with the global imports decline of 21.6%. These were the sharpest falls in imports and exports since records began in January 1997.
Some trading companies either temporarily halted doing business with its biggest trading partner to let the disruption pass or exported goods earlier, in December, due to fear of chaos at ports. It is unknown how much of the loss of trade will be permanent and how much will take place in other months.
The ONS said the figures were not representative of the situation due to the disruption of trade from Brexit. A poll of the Institute of Directors members revealed that nearly one in five company directors whose businesses usually trade with the EU had halted exports and imports in January. Of those who had stopped trade in January, 48% said it was temporary and 42% said it was permanent.
The ONS said that overall exports from the UK economy to the rest of the world fell by £5.3 billion, or 19.3%, in January. The ONS said stockpiling before the Brexit transition period ended had most likely been a factor affecting January trade and emphasised that early indications were that imports and exports had begun to pick up near the end of January.
The number of traders reporting that they were unable to export decreased by 5% in the last week of January compared with the previous two weeks. Although Brexit appears to be a significant factor, the ONS also pointed to global supply chain issues due to the pandemic and the impact on trade in general as a result of Covid.
Car exports declined by £200 million in January, likely due to lockdown measures in Germany, Belgium and the Netherlands, where exports fell the sharpest. Imports and exports of chemicals also saw steep decreases, driven by extreme declines in the trade of medicines. Pharmaceutical and medical exports plummeted 57.3% and imports slumped 62.6%. Once more, imports from the Netherlands, Germany and Belgium accounted for 76% of the decline.
Imports of clothing crashed due to a decrease in Chinese goods coming into the UK. That was attributed to the drop in UK fashion sales during lockdown and stockpiling before January.