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The UK’s trade with the European Union deteriorated in the first month since the Brexit split, suggesting that trade relations between the two economies will suffer more than the British government announced.
UK goods exports to the EU fell nearly 41% in January from the previous month, while the bloc’s imports fell 29%, data from the Office for National Statistics showed on Friday. The most affected EU imports were machinery and transport equipment, especially cars, and medicinal and pharmaceutical products.
Importers on both sides of the canal built up inventories ahead of the January 1 split, leading to less cross-border cargo shipped by air, sea and rail and largely avoided the lengthy traffic jams many critics had predicted.
Prime Minister Boris Johnson had insisted on any friction suggested by more high-frequency data has simply been “initial problems ”, but evidence from statistical agencies in Germany, France and Italy indicated that there was a sharp drop in shipments from the EU to Britain in the first month after the transition period ended.
“What we don’t know is how much of this is permanent and how much is ‘early trouble’ and will gradually return,” said former UK trade negotiator David Henig, director of the UK’s European Center for International Political Economy. “Possibly a quarter of the changes could be attributed to the effects of accumulation.”
Exports of food and live animals to the EU, goods that are expensive and difficult to store, have plunged 64% from December, possibly due to stricter controls and certifications implemented by the EU at the end of the transition period, the ONS said. . The Scottish Seafood Association has signaled an increase in “red tape” on goods shipped from Scotland to France, with shipping approval taking six times longer and the previous overnight transit now lasting three days.
The government blamed the results on warehousing, Covid-19 shutdowns, and companies conforming to the new deals. David Frost, who negotiated the Brexit trade deal with the EU and is now the UK minister in charge of relations with the bloc, said it was inevitable that the figures were “unusual” in January and that freight volumes have returned. to normal.
“Many companies have made the necessary changes to do business effectively with the EU, but we are focused on providing extensive and active support to others who need to adapt,” he said in a tweet.
Weak trade figures contributed to the biggest drop in economic output since April. Separate figures released on Friday showed the UK Gross domestic product contracted 2.9% in January due to falls in both the manufacturing and services industries.