UK trade data to remain volatile for foreseeable future following rebound to pre-Brexit levels

Thu 1 Jul 2021
Posted by: William Barns-Graham
Trade News

UK exports to the EU rebounded to pre-Brexit levels in April, having suffered a large decline at the start of the year.

ONS data for April, reported in City AM, shows EU exports were only slightly down on the figures for the same month in 2019.

The UK exported £130bn to the bloc in the month this year compared with £132bn two years ago.

Improved trade deficit

Exports to the EU and to the rest of the world were down by 14% for the first four months of 2021 compared with 2019.

However, a decline in imports of 21% meant the UK’s trade deficit narrowed from £63bn to £43bn for that period.

Bounce back

However, the ONS has noted that Brexit and the pandemic have produced unprecedented volatility in trade statistics.

Trade in the first part of the year was impacted by several unique factors including pre-Christmas stockpiling and the ‘teething problems’ businesses experienced with new customs procedures and IT systems.

As the particular circumstances from earlier in the year eased, it was inevitable that trade would bounce back, a report from UK in a Changing Europe has claimed.

However, it also argued that the decline in exports in some sectors is expected to be permanent.

Continuing challenges

Volatility in UK trade is expected to continue for the foreseeable future as aspects of the country’s trading relationships with the EU and non-EU markets continue to be negotiated on and are subject to changing regulations.

For instance, firms will now have to adapt to new EU VAT rules which come into effect today, as reported in the IOE&IT Daily Update yesterday.

The rules require firms to now collect VAT from their customers at the point of sale and will significantly impact e-commerce businesses selling via online marketplaces.

Struggles with procedures

Britain’s manufacturers are calling on the government to provide more help to support firms adapt to new rules and procedures.

A survey my trade association Make UK, reported in The Manufacturer, found that 96% of manufacturers had faced challenges since with beginning of the year, with 86% calling on government to work with the EU to ease exporting and customs formalities.

Stephen Phipson, CEO Make UK, said: “It is clear that much of the Trade and Cooperation Agreement needs to be worked on further in order to smooth out continuing difficulties for both UK and EU companies in a number of areas including customs, mobility, legislation and standards.”