UK exports to Europe plunge as Brexit kicks in

It was like a light being switched off, said one Scottish fish exporter as the new trading terms between the United Kingdom and European Union took effect. “One day we could deliver fresh fish right into the heart of Europe, the next day we couldn’t.” In fact, this sector was one of the worst affected by the changes, with live animal and seafood exports down by 64%

The irony of the situation that Scottish fishermen face is that they come from a part of the UK that voted to remain in the EU.

This is just the tip of the iceberg, however. Whilst Scottish fishermen and exporters grappled to find solutions as tons of once fresh fish and shellfish sat moldering in trucks, other industries were also facing the bleak reality of the removal of the seamless trade arrangements that were suddenly whipped from below their feet.

Despite all the time they had to prepare and the promises that Boris Johnson and others made after the 11th-hour agreement of a deal between the two factions, it seems that many of the UK’s businesses were still caught wholly unprepared.

In January 2021, the UK exported goods to the European Union with a value of £8.1 Billion. This is down 41% from the preceding month, and while there are some seasonal variances that can account for a part of this figure, they are negligible. According to the UK’s Office of National Statistics, (ONS) these figures represent the largest monthly decline in UK exports since 1997.

Imports from Europe were also affected, falling by 29% to £16.2 Billion when compared to December 2020.

These are bleak figures, and the hope is that much of the decline will be down to a period of learning as firms struggle to come to terms with the new border checks and custom procedures they must now adhere to. However, when Boris Johnson attributed it as mere ‘teething problems’ business leaders and groups cried foul.

Is the situation likely to improve?

If people want to trade, then trade will happen. This has been true throughout history and is likely to be the case here, with figures from the end of January showing improvement over those from earlier in the month.

There is also the coronavirus effect, the UK was in a strict national lockdown during January, which is inevitably going to skew the figures. But even taking these factors into account, the loss in trade between the UK and EU is likely to be substantial and stay that way into the future, with the situation only gradually improving as businesses get a handle on the new procedures.

A point verified by Paul Dales, the chief UK economist at Capital Economics, “While the plunges in exports and imports weren't entirely due to Brexit, they increase the chances that Brexit will have a longer-lasting influence on trade flows.”

There is a lot of work to be done on both sides if anything like pre-Brexit trade levels is to be achieved. With the pandemic easing and the world slowly awakening to a new normality, time is going to tell just how trade is going to recover.