New ONS figures show GDP growth in August and continued recovery for UK-EU trade across the summer

Wed 13 Oct 2021
Posted by: William Barns-Graham
Trade News

The UK economy grew by 0.4% in August, with growth over the three summer months amounting to 2.9%, according to new figures from the Office for National Statistics.

Although dropping slightly month-on-month, exports and imports to the EU have both increased over the longer summer period.

Hospitality helps

The monthly uptick in GDP is slightly less than the expected 0.5% rise, but better than July when it slipped by 0.1%.

The BBC credits the August figures to more people dining out, going on holiday and attending music festivals.

The ONS figures show arts, entertainment and recreation up by 9%, boosted by sports clubs, amusement parks and festivals.

Christmas worries

However, Emma-Lou Montgomery associate director at Fidelity International, warns that “the worry remains that economic growth won’t even be in touching distance of pre-pandemic levels until well into next year”.

While suppliers and retailers should be “firing on all cylinders” in the lead up to Christmas, she said upcoming steep price rises on food and fuel meant “there will be little desire - or capacity - to spend, spend, spend”.

Trade figures

August figures for trade showed total exports of goods, excluding precious metals, fell by £1.3bn (4.6%) because of a £0.6bn (4.3%) fall in exports to the EU, and a £0.7bn (5%) fall in exports to non-EU countries.

Total imports of goods, excluding precious metals, fell by £1.3bn (3.1%), driven by a £1.2bn (5.6%) fall in imports from non-EU countries, while imports from the EU fell slightly by £0.1bn (0.5%).

The decline in exports in August was almost entirely driven by falls in exports of machinery and transport equipment to both EU and non-EU countries, said the ONS.

Staff shortages due to self-isolation and the shortage of HGV drivers are also picked out as factors that continue to affect both imports and exports.

Broader EU trade recovery

When viewed over the most recent three-month period, exports and imports with the EU both improved in the summer compared to the spring.

Exports to the EU were up 2.5% in the three months up to August compared to the previous period up to May, while imports increased by 4.9%.

Exports to non-EU markets dropped in this period by 5.3%, however. Imports from the rest of the world increased by 4.9%.

Disruption

Commenting on the figures, William Bane, head of trade policy at the British Chamber of Commerce said that although there were signs that in the last three months exports to the EU have picked up, they remain £1.8bn less than the same period three years ago before Brexit. 

He warned that businesses are also increasingly worried about further disruption to trading terms.

“Concerns are rising about tariffs or loss of trade facilitation measures if there is a major deterioration in EU-UK relationship over the next year,” he said in a statement responding to the figures. “This would knock down a still fragile set of import and export data on EU-UK trade.”