EU trade data after Brexit: figures for January 2021

The first batch of official UK trade data since leaving the European Union highlights the initial damage caused to the flow of goods by Brexit.

The figures show a sharp drop in remittances to and from the EU in January, the first month after the end of the transition period. Exports to the 27-nation bloc plunged nearly 38% year on year, while imports fell nearly 16%, according to data from the Office for National Statistics released Friday. In comparison with December, exports fell 41% and imports 29%.

There is no doubt that Brexit is to blame for some of the damage, according to ING economist James Smith. “Some things have probably improved in the weeks since” January, he says. “But there are also signs that companies are still struggling.”

Diving into the commodity trade

January data for UK trade flows

• Pre-referendum (2010–2015)

• Year of the referendum and withdrawal negotiations (2016–2019)

• Covid-19 transition period and pandemic (2020)

• Post-Brexit (2021)

Prime Minister Boris Johnson insists that any friction in international trade has been merely an “initial problem,” and the additional stress of the pandemic is definitely distorting trade. The big question to ask throughout the year is whether these temporary shocks become more lasting trends.

One difficulty in determining the cause of the decline is to separate the impact of coronavirus blocks from the new border rules due to Brexit. Comparing the UK’s trade flows with those in the EU with those from countries outside the bloc sheds some light on the issue.

January may not be a good indicator for what the rest of 2021 may represent, in part because the economy has been largely closed. In addition, many companies were still working on accumulated stocks at the end of last year, predicting that new customs deals would cause delays. Others had not yet recovered from the chaos at the port of Dover before Christmas, when France blocked UK travel to prevent the spread of a mutant strain of the virus.

What is clear: experts predict that instability will continue for months, with post-Brexit barriers making things worse.

Erratic times for trade

Monthly figures for UK trade flows

• Pre-referendum period average

• Average referendum year and withdrawal negotiation period

• Covid-19 transition period and pandemic

• Post-Brexit

The implementation of health checks on EU food imports will be postponed from April to next January, the UK government recently announced. While this helps to prevent supermarket shelves from becoming empty, British exporters expect the commercial turmoil to continue, as the EU has been imposing controls since January 1.

Other heavy-duty industries should be on the lookout for signs of persistent transition headaches: exports of automobiles, fish and clothing.

Main Exports

How exports of selected products from the UK to the EU fared in January

• Pre-referendum

• Referendum year and withdrawal negotiations

• Covid-19 transition and pandemic period

• Post-Brexit

The EU has traditionally been the UK’s main partner in trade in goods, but the decoupling of the bloc has triggered a downward trend in UK exports to the EU. In January, the EU’s share fell to 36%, a new low since November 2019 and the lowest in the last 11 years. In most months, more than half of all UK imports are from the EU, but in January that share exceeded 50%.

Monitoring the changing composition of UK trade with the EU and the rest of the world will be the key to understanding whether the government’s campaign for a “Global Great Britain” is working.

Business partners

Part of total UK exports and imports

• Pre-referendum

• Referendum year and withdrawal negotiations

• Covid-19 transition and pandemic period

• Post-Brexit

David Frost, who negotiated Brexit’s trade deal with the EU and is now the minister in charge of the UK’s relations with the bloc, said the numbers were inevitable to be “unusual” in January. “Many companies have made the necessary changes to negotiate effectively with the EU, but we are focused on providing active and broad support to others who need to adapt,” he added.