UK exports to EU have dropped by 20 billion compared with last period of stable trade

UK exports to EU have dropped by 20 billion compared with last period of stable trade

According to official figures marking the first full year since Brexit, UK exports of goods to the EU have dropped by 20 billion compared with the last period of stable trade with Europe.

The combined impact of the Pandemic and Britain exit from the single market caused a 12% fall in exports between January and December last year compared to 2018 according to the numbers released by the Office for National Statistics ONS on Friday.

Exports to the rest of the world excluding the 27 nation bloc decreased by a much smaller 10 billionn, or about 6% compared to 2018 levels, highlighting the disproportionate impact of leaving the EU.

The ONS compared trade performance against figures from three years ago because that was the last year before the distortions caused by firms stockpiling ahead of the Brexit deadlines and the spread of Covid - 19.

The EU remains the UK's largest trading partner despite the disruption. The UK now spends more on imports than from the EU for the first time since comparable records began in 1997.

UK goods imported from the EU were down almost 17%, or about 45 bn, compared with 2018 for shipments sent the other way. In comparison, imports from the rest of the world increased by almost 13%, or about 28 bn.

With the EU accounting for less than half of UK exports worldwide, economists said that the EU was serving as an additional headwind for Britain, adding to the disruption felt by Covid across advanced economies. Gabriella Dickens, an economist at Pantheon Macroeconomics, said UK exporters are continuing to lose market share.

In recent months, real goods exports from advanced economies were 3.8% more than their 2018 average in November, outpacing the UK, according to the Netherlands Bureau for Economic Policy Analysis.

The hardest hit commodities recorded dramatic falls. Outbound shipments of clothing and footwear to the EU were down by almost 60% compared to 2018. Food and live animal exports for which more stringent border checks are required were down almost 18%, while vegetable exports fell by almost 40%. Shipments of cars to the EU, heavily disrupted by global supply chain issues and Covid, were down by a quarter.

Guillermo Larbalestier, a trade economist at the University of Sussex, said that the drop in vegetable exports was probably linked to a fall in the number of seasonal workers available to pick and process crops, more burdensome paperwork and the difficulty in exporting perishable goods in the face of extended delays at the border.

A high proportion of clothing sold by UK retailers are made in Asia or the US, making them ineligible for the tariffs negotiated in the post-Brexit trade deal.

The latest figures show a recovery from the worst of the damage caused by Britain in January 2021, just after Britain left, when exports to the EU plunged 40%.

The latest figures show that UK exports to the EU in December 2021 were about 200 m higher than the same month in 2018, but much of this was driven by an increase in wholesale gas prices on international energy markets.

Business leaders have warned that border restrictions and red tape have pushed up costs and added to delivery times, which has seriously undermined the competitiveness of UK goods on the continent.

Sixty-seven percent of firms experienced a challenge when it comes to exporting and 72% when importing in the last month, according to ONS surveys.

Grant Fitzner, chief economist at the ONS, said that there is a lot more friction on trade, which you would expect to have a more medium- to long-term impact.

Gareth Thomas, the shadow international trade minister, said that the government exaggerated the benefits of trade deals with countries outside the EU that have yet to be negotiated. Ministers are not doing enough to support our exporters in markets outside Europe, while the deal they negotiated with the EU has led to long lorry queues into Dover, a big increase in red tape and a significant decline in trade, he said.

The UK government has been approached for comment.