Exports grow as UK GDP shrinks during second lockdown, but no US deal boost in sight in early 2021

Fri 15 Jan 2021
Posted by: William Barns-Graham
Trade News

uk trade stats

UK GDP shrank in November during the second wave of lockdown restrictions and is almost a tenth smaller than its pre-pandemic peak.

ONS figures released this morning (15 January) show that the UK economy shrunk by 2.6% during the month and is 8.5% below levels from February last year. 

This follows six months of consecutive growth following the summer lull in Covid-19 cases.

Services hit

The services sector was particularly affected by the renewed social distancing restrictions, falling 3.4% in November and down 9.9% on February 2020. 

The construction sector, however, showed growth of 1.9% in November, putting it up 0.6% on the February benchmark.

Good month for exports

Regarding trade, the ONS figures show export volumes grew by £1.9bn in value in November, with imports up £2.4bn.

However, in the three months up to November 2020, the trade deficit increased by £8.1bn and in the year up to November the deficit grew by £40bn.

US keeps tariffs on Scotch whisky 

In bad news for UK exports, ministers have given up hope of striking a last-minute mini-trade deal with the US to remove duties on British goods such as Scotch whisky. 

The Times reports that the outgoing Trump administration has not yet tabled an offer and the issue is not going to be a priority for President-elect Biden. 

‘Close to zero’ chance of mini-deal

This is despite the UK having removed a range of tariffs on US goods in a bid to persuade the White House to remove the 25% tariffs which have led to a loss of £300m in sales for the whisky industry. 

A source close to the talks said they didn’t reach a stage where a “palatable” agreement was on the table and that the chances of getting an agreement now were “close to zero”.