British government plays down 40% slump in exports to EU

The British government has played down a 40 per cent slump in exports to the European Union in January, the first month's figures since Britain left the single market and customs union. The Office for National Statistics (ONS) said exports to the EU fell by almost 41 per cent, with the value of goods sent to the Republic dropping by 47 per cent the largest fall for any destination.

Imports from the EU fell by nearly 29 per cent and the falls in imports and exports were the biggest on record since 1997. Exports to other parts of the world remained relatively flat, indicating that the sharp drop in goods moving to the EU was in part a consequence of Brexit.

A government spokesperson said the figures did not accurately reflect the real trading relationship between Britain and the EU.

“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 spokesperson said.

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“This data does not reflect the overall EU-UK trading relationship post Brexit and, thanks to the hard work of hauliers and traders, overall freight volumes between the UK and the EU have been back to their normal levels since the start of February.”

The British government this week announced a further postponement on checks for goods entering Britain from the EU, although the EU has been checking goods moving in the other direction since the beginning of January. The government has dismissed as “teething problems” the difficulties faced by many businesses since the new procedures came into force but Suren Thiru, head of economics at the British Chambers of Commerce, said the latest figures were an “ominous indication” of the damage being done to trade.

Practical difficulties

“The practical difficulties faced by businesses on the ground go well beyond just teething problems and with disruption to UK-EU trade flows persisting, trade is likely to be a drag on UK economic growth in the first quarter of 2021,” he said.

“Although the postponement of import checks will help avoid exacerbating the current disruption, there must be a greater focus on long-term solutions to improving the flow of UK-EU trade. Offering tax credits to?support firms to adapt to the new arrangements would help many address new burdens and requirements better.”

Labour’s shadow cabinet office minister Rachel Reeves said the trade figures showed how many British businesses had been struggling with the new burden bureaucracy necessitated by Boris Johnson’s Brexit deal.

“Businesses have been appealing to the government to start listening to the problems they’ve been facing, but they’ve been left out in the cold. The government must up their ambition here, and take practical action, hand in hand with businesses, to build on the limited deal they negotiated with the EU,” she said.