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British trade with the European Union has deteriorated in the first month since the break-up of Brexit, suggesting that trade relations between the two economies will suffer more than the British government has announced.
Exports of goods from the UK to the EU fell by almost 41% in January compared to a month earlier, while imports from the bloc fell by 29%, according to data from the National Statistics Office on Friday. The most affected imports from the EU were machinery and transport equipment, in particular cars and medicines and pharmaceuticals.
Importers on both sides of the canal built inventory before the January 1 split, leading to fewer cross-border goods shipped by air, sea and rail and largely avoiding prolonged blockages that many critics predicted.
Prime Minister Boris Johnson had insisted on any friction suggested by several high frequency data were simple “dental problems “, but evidence from statistical agencies in Germany, France and Italy showed a sharp decline in transport from the EU to the UK in the first month after the end of the transition period.
“Storage effects”
“What we don’t know is how much is permanent and how much ‘tooth problems’ and will gradually return,” said former UK trade negotiator David Henig, the British director of the European Center for International Political Economy. “You could attribute a quarter of the changes to storage effects.”
Exports of live food and animals to the EU – goods that are expensive and difficult to store – have fallen by 64% since December, possibly due to stricter checks and certifications implemented by the EU at the end of the transition period, the ONS said. The Scottish Seafood Association has highlighted an increase in “bureaucracy” on goods sent from Scotland to France, with the shipment being six times longer and the overnight transit lasting three days ago.
The government blamed the results on stockpiling, blocking Covid-19 and adjusting businesses to the new arrangements. David Frost, who negotiated the Brexit trade deal with the EU and is now Britain’s minister responsible for relations with the bloc, said it was inevitable that the figures would be “unusual” in January and that cargo volumes have since returned to normal.
“Many companies have made the necessary changes to trade efficiently with the EU, but we are focusing on providing active and extensive support to others who need to adapt,” he said in a tweet.
Weak trade figures contributed to the largest decline in economic output in April. Separate figures released on Friday showed the UK gross domestic product fell by 2.9% in January, due to declines in both the manufacturing and services industries.