UK trade with EU falls by almost a quarter in first three months of 2021

The UK saw steep declines in imports and exports to the European Union (EU) as well as a slight decline in trade with non-EU nations, in the first quarter of 2021, according to the Office of National Statistics (ONS).

The ONS report, The impacts of EU exit and the coronavirus on UK trade in goods, looked at UK world trade figures in the first quarter (January-March) of 2021 and compared them to the same period in 2018, before the impact of Brexit preparations and the Covid-19 pandemic.

It revealed that total trade in goods with EU countries  - both imports and exports - fell by 23.1% in the first quarter (Q1) of 2021 compared to Q1 2018, whilst total trade with non-EU countries decreased by 0.8%.

The report also found that exports to Ireland in Q1 2021 saw the greatest proportionate fall of the UK's top exporting partners after the EU transition period, down by 47.3%, while imports from Ireland fell by 4.4%, compared to Q1 2018.

Imports from Germany also declined by 2.6% in the period, with Germany experiencing the greatest fall in the value of imported goods of any major trading partner, decreasing by £1.7bn (30.5%).

In comparison goods imported from China in the first quarter of the year rose by 65.6% compared to the same period in 2018.

Whilst the report said it was too early to say what long-term impact Brexit is having on UK trade, it noted that in mid-February 2021, over 55% of exporters said Brexit changes were causing them problems, compared to only around 10% of exporters saying Covid was a challenge.

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Responding to the report, David Jinks, ParcelHero’s head of consumer research, said: “Contrary to the optimistic claims of Brexiteers during the referendum, this was not balanced by an increase in trade to non-European countries, such as the USA. Non-EU trade declined 0.8% in the same period, though total trade with non-EU countries surpassed that with EU countries in the first quarter of 2021 for the first time.

‘The report also reveals that in 2021 Brexit has had a far more significant impact than the pandemic - it is small wonder that trade with Germany, the UK’s biggest EU partner,  and Ireland has collapsed significantly."

‘The key takeaway from this report is that UK trade has not just hit a run of bad luck. While no one could have predicted the pandemic, the end of the EU transition period was entirely foreseeable and its worst effects the result of an 11th-hour deal that came too late for most exporters. The deal contained huge fudges, including both the Northern Ireland Protocol and overcomplicated proof of origin requirements to prove items were made in the EU or UK.”

Atul Bhakta, chief executive of shipping brokerage platform One World Express, took a more optimistic view of the figures this week, predicting that, despite the challenges from both Brexit and the pandemic, the UK economy could begin to recover this year.

“The UK could be turning a corner. The successful vaccine rollout, coupled with a better grasp of post-Brexit customs regulations, seems to be reigniting trading activity. Adding to this, we are seeing a growing demand for “Brand UK” in markets such as South East Asia, as well as promising trade deals with the likes of Australia in the offing, which will add to business confidence.

“Clearly, the UK’s trading levels have some way to go before returning to pre-pandemic levels. Yet promising trading opportunities – particularly ones beyond the EU – are continuing to present themselves. As such, I predict that the outlook for UK exports, and business growth more generally, will begin to look increasingly positive over the coming months.”