UK exports to EU drop as Brexit disrupts trade

The UK's trade with the EU hit an all-time low in January as exports into the EU fell by 40% while imports saw a tumble, according to the latest data from the Office of National Statistics (ONS).

Imports saw a drop of 28.8% in the same time frame, with both seeing the lowest numbers since records began in 1997.

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ONS data suggests similar pitfalls did not occur with trade with nations from outside the EU, suggesting the problem has occurred due to disruptions from Brexit. However, the factors leading to the shrink are likely temporary, the firm added.

Overall, the British economy shrank by 2.9% in 2020 which has been widely attributed to the third lockdown that came into effect shortly before Christmas.

The economy is now 9% smaller than it was before the coronavirus pandemic.

UK exports to Ireland fell by 47% when compared with the previous month, seeing the sharpest fall across UK destinations.

Manufacturing has also seen a massive decline through the pandemic, despite much of industry being cushioned by the rollout of vaccines.

Jonathan Athow, an ONS analyst, told the BBC: "Manufacturing also saw its first decline since April with car manufacturing falling significantly. However, increases in health services from both vaccine rollout and increased testing partially offset the declines in other industries."

Economic health reportedly increased by 8.7% in January, mainly through the UK's swift vaccine rollout and response, which has gone some way to allaying public fears concerning the end of the pandemic.

The ONS has also suggested that levels began to return to normal towards the end of the month, which also could have been aided by vaccine rollout.

Government ministers have claimed the reports of border rules and restrictions were a temporary setback, but the issue presents wider issues.

The government have admitted the figures are not as bad as they seem. In a statement, The Cabinet Office said: “A unique combination of factors, including stockpiling last year, Covid lockdowns across Europe, and businesses adjusting to our new trading relationship, made it inevitable that exports to the EU would be lower this January than last."

The end of the Brexit transition period came around just as new strains of the vaccine started to emerge, which resulted in extra precautions for those working in industries such as freighting and shipping, as tests became compulsory to enter the continent.

In terms of raw figures, exports into the EU fell by £5.3 billion (€6.2 billion) in 2021, whereas imports fell by £8.9 billion (€10.4 billion).

The slumps in imports were largely seen in areas such as machinery and transport equipment, as well as medical and pharmaceutical products.

By contrast, the healthcare sector made strides in aiding economic growth for January, seeing an 8.7% rise, mainly owing to Covid testing and vaccination programmes.

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However, ONS data has suggested many of the disturbances faces early on are being dealt with and trade is becoming easier.

Figures show numbers started to bounce-back by the end of January, signalling the potential for economic growth as the year continues.

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