Saturday, March 13, 2021
The Brexit effect
Anybody who thinks that Brexit is going to plan really needs to think again in the light of the latest economic data.
The Guardian reports that UK exports of goods to the EU plunged by 40.7% in January as the first month since Brexit and the imposition of a new Covid lockdown resulted in the biggest monthly decline in British trade for more than 20 years:
In the first month since leaving the EU on terms agreed by Boris Johnson’s government, the Office for National Statistics said goods exports to the bloc fell by £5.6bn, while imports fell by 28.8%, or £6.6bn.
Exports of food and live animals to the EU were the hardest hit by Brexit, collapsing by 63.6% in January. Consignments of fish and shellfish collapsed by 83% from the level a year ago to only £16m.
This reflected heavier disruption and additional checks for consignments from this sector that prompted furious protests from the fishing industry. However, food and live animals account for only 7% of total UK exports.
After stockpiling and disruption at UK borders in the run-up to the Brexit transition, the decline also came as the economy in January shrank by the largest amount since the first wave of the pandemic, with gross domestic product (GDP) falling 2.9% from December, according to the ONS.
The ONS said the January performance was the worst since monthly records began in 1997, as a 1.7% rise in non-EU trade, worth £200m, failed to make up for the plunge in cross-border activity with the UK’s biggest trading partner. Overall, global UK exports and imports fell by about a fifth.
Although January’s GDP figure represents the biggest contraction since the first lockdown almost a year ago, analysts had forecast a bigger decline of 4.9%, suggesting that businesses and households adapted better to harsh restrictions than during the first wave of the pandemic, when GDP fell by more than 20% in April 2020.
No doubt Boris Johnson and his ministers will seek to hide behind the Covid crisis as the excuse for these figures and it is true they played a part, however as Samuel Tombs, the chief UK economist at the consultancy Pantheon Macroeconomics says: “Brexit made a bad situation worse. “Brexit is best seen as a slow puncture, rather than a sudden blowout, with the costs gradually accumulating in the form of lower investment and immigration than otherwise would have been the case.”
Suren Thiru, the head of economics at the British Chambers of Commerce, added: “The practical difficulties faced by businesses on the ground go well beyond just teething problems and with disruption to UK-EU trade flows persisting, trade is likely to be a drag on UK economic growth in the first quarter of 2021.”
Another fine mess this government has got us into.
The Guardian reports that UK exports of goods to the EU plunged by 40.7% in January as the first month since Brexit and the imposition of a new Covid lockdown resulted in the biggest monthly decline in British trade for more than 20 years:
In the first month since leaving the EU on terms agreed by Boris Johnson’s government, the Office for National Statistics said goods exports to the bloc fell by £5.6bn, while imports fell by 28.8%, or £6.6bn.
Exports of food and live animals to the EU were the hardest hit by Brexit, collapsing by 63.6% in January. Consignments of fish and shellfish collapsed by 83% from the level a year ago to only £16m.
This reflected heavier disruption and additional checks for consignments from this sector that prompted furious protests from the fishing industry. However, food and live animals account for only 7% of total UK exports.
After stockpiling and disruption at UK borders in the run-up to the Brexit transition, the decline also came as the economy in January shrank by the largest amount since the first wave of the pandemic, with gross domestic product (GDP) falling 2.9% from December, according to the ONS.
The ONS said the January performance was the worst since monthly records began in 1997, as a 1.7% rise in non-EU trade, worth £200m, failed to make up for the plunge in cross-border activity with the UK’s biggest trading partner. Overall, global UK exports and imports fell by about a fifth.
Although January’s GDP figure represents the biggest contraction since the first lockdown almost a year ago, analysts had forecast a bigger decline of 4.9%, suggesting that businesses and households adapted better to harsh restrictions than during the first wave of the pandemic, when GDP fell by more than 20% in April 2020.
No doubt Boris Johnson and his ministers will seek to hide behind the Covid crisis as the excuse for these figures and it is true they played a part, however as Samuel Tombs, the chief UK economist at the consultancy Pantheon Macroeconomics says: “Brexit made a bad situation worse. “Brexit is best seen as a slow puncture, rather than a sudden blowout, with the costs gradually accumulating in the form of lower investment and immigration than otherwise would have been the case.”
Suren Thiru, the head of economics at the British Chambers of Commerce, added: “The practical difficulties faced by businesses on the ground go well beyond just teething problems and with disruption to UK-EU trade flows persisting, trade is likely to be a drag on UK economic growth in the first quarter of 2021.”
Another fine mess this government has got us into.
