According to ONS figures, British exports to the EU fell by 40.7 percent in January 2021.
This was the first month after the end of the Brexit transition, when customs regulations changed and businesses struggled with additional paperwork. The ONS added that imports also fell 28.8 percent (£ 6.6 billion) in January.
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Much of this is likely to be what the ONS calls “temporary factors”. These include concerns about the outcome of the Brexit deal as well as projections for a third lockdown towards the end of 2020. The stockpiling of these events is likely to contribute to the decline.
However, there were no similar declines in UK trade with non-EU countries, suggesting that Brexit was a major contributor to this.
Yael Selfin, chief economist at KPMG UK, said Brexit is the most likely reason to do less business with EU countries, but she foresees a recovery: “Long term [Brexit] The impact on supply chains will depend on how attractive the UK remains and what competition other locations within the EU have, “she said.
The extent of the decline in exports is beyond the expectations of most economists. In fact, this is the largest drop since records began in 1997. Data also showed that trucks near UK ports fell 12 percent in January.
However, the ONS found other indicators that suggest trading began to recover in late January. The Cabinet Office also argues that improved cargo volumes after January show that the numbers weren’t as bad as they looked.
In addition, the ONS released figures showing the UK economy contracted 2.9 percent in January when the third national lockdown went into effect. In contrast, this is a smaller than expected drop and a much smaller drop than last April. The service sector saw the largest decline, and manufacturing also declined, with construction costs increasing slightly. The economy is now nine percent below its pre-pandemic high.
This will avoid paying £ 130,000 VAT registration fees when exporting to the EU