LONDON (REUTERS) – Exports and imports from Britain to the European Union plunged during the first month of the country’s new trade relationship with the bloc, according to data published on Friday (March 12) with some heavy caveats.
Exports of goods to the EU, excluding non-monetary gold and other precious metals, slumped by 40.7 per cent in January, the Office for National Statistics (ONS) said. Imports fell by 28.8 per cent
The ONS had previously warned that the hit to trade from the Covid-19 pandemic would make it difficult to identify a Brexit impact from new Customs arrangements in January’s data.
But it said there were signs that this hurt trade at the start of the year.
“External evidence suggests some of the slower trade for goods in early January 2021 could be attributable to disruption caused by the end of the transition period,” the ONS said.
It said the weak figures likely reflected a lull after stockpiling in November and December ahead of the end of the Brexit transition period and it also pointed to a new national coronavirus lockdown in Britain that started in January.
“All of these are potential contributing factors to the fall in January trade in goods,” the ONS said.
Britain’s overall goods trade deficit, including non-EU countries, narrowed to £9.8 billion (S$18.4 billion) in January from £14.3 billion in December.
Also on Friday, official data showed that Britain’s economy shrank by a less severe than expected 2.9 per cent in January from December as the country went back into a coronavirus lockdown.
Economists polled by Reuters had expected a contraction of 4.9 per cent.
Britain’s economy is likely to shrink by 4 per cent in the first quarter of 2021, due mostly to the latest lockdown but also because of disruption caused by new, post-Brexit rules for trade with the EU, the Bank of England said last month.
“The economy took a notable hit in January, albeit smaller than some expected, with retail, restaurants, schools and hairdressers all affected by the latest lockdown,” Mr Jonathan Athow, an ONS statistician, said.
“Manufacturing also saw its first decline since April, with car manufacturing falling significantly. However, increases in health services from both vaccine rollout and increased testing partially offset the declines in other industries.”
Britain’s economy shrank by 1.7 per cent in the three months to January, stronger than a median forecast of a contraction of 2.5 per cent in the Reuters poll.
The economy was 9.2 per cent smaller than in January last year, the ONS said.
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