UK-EU trade drops sharply as Brexit disruption begins to bite

The Brexit disruption took its toll on Anglo-French trade volumes earlier this year, reflecting the decline in trade activity between the UK and other major EU countries.

French exports to the UK fell 13% in January compared to the average for the previous six months, while French imports from the UK fell 20%, according to the French customs office. “Trade with Britain is disrupted due to Brexit,” he said.

The volume of French exports and imports from other countries increased in January compared to the previous month. Anglo-French trade had recovered from the impact of the coronavirus pandemic last year, increasing for the second year in a row, boosted by businesses stocking up before the UK left the UK’s single market ‘EU at the end of December.

But the new French figures indicate that the frictional barriers and uncertainty created by Brexit have taken a heavy toll on trade activity between the UK and the EU, its main trading partner.

Even though the UK and the EU have agreed to a last resort commercial agreement To avoid tariffs on most goods which went into effect on January 1, trade was further disrupted by higher shipping charges, transportation delays, health certificate requirements and customs requirements more complex at the border.

Some tariffs are always taken on goods imported into the UK and then re-exported to EU markets with little or no further processing.

German exports to Great Britain in January were down around 30% year-on-year, continuing a downward trend in trade between the two countries since the Brexit referendum in 2016, according to figures released this week by the Federal Statistical Agency.

Separately, Italy last month reported a 38 percent year-over-year drop in exports to the UK and a 70 percent drop in UK imports in January – two declines much sharper than those to other countries.

However, economists said it was still unclear to what extent the declines in trade between the UK and the EU were the result of Brexit and how many were caused by the fallout from the pandemic, which has caused a hard blow to world trade in the first half of last year.

“I’m having a hard time deciding what the impact of Brexit is and what is simply due to the impact of the coronavirus,” said Gilles Moec, chief economist at French insurer Axa.

Before the UK left the EU single market at the end of last year, many UK and EU companies had stockpiled in anticipation of rising costs and Brexit disruption, this which may have contributed to the decline in January by reducing their inventories. , Moec added.

“There were so many stories of companies struggling to export or import after Brexit and that many carriers were reluctant to deal with customs issues, so there must have been an impact,” he said. he said, adding that it was “still too early. To say to what extent the decline in trade with the United Kingdom would be permanent.

The UK is in constant decline as a trading partner of the rest of the EU. Its share in the overall exports of the bloc of 27 countries has fallen from 17% to 14% since the 2016 Brexit referendum, according to Eurostat.

Overall EU trade figures for January are expected to be released later this month. But last year, the bloc’s exports to the UK fell 13.2%, while EU imports from the UK fell 13.9%.

While the pandemic has resulted in a drop in overall EU trade, the UK has experienced a steeper decline than the EU’s three other major trading partners – the US, China and Switzerland.

Gabriel Felbermayr, president of the Kiel Institute for the World Economy, said research conducted for the German government found that the country’s exports to the UK would likely remain 12-15% below levels of before Brexit.

“Part of the recent collapse is due to startup issues,” Felbermayr said. “The main new trade barrier in trade in goods is rules of origin which are costly to document and adhere to; however, traders will learn to manage them. “

He said there was evidence that “many of the greatest [German] businesses planned for Brexit and rearranged their operations “to accommodate the likely disruption, while small businesses did less.”

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