The UK financial system shrank 2.9 per cent in January as lockdown measures took impact whereas exports to the EU collapsed, official figures present.
Items exports to the EU plunged by 40.7 per cent in January and imports fell 28.8 per cent as companies battled with new buying and selling preparations and a raft of purple tape following the top of the Brexit transition interval. The month-to-month falls in imports from and exports to the EU are the biggest since data started in 1997.
There have been no related falls in Britain’s exports to non-EU international locations, indicating that Brexit was a major cause for the sharp decline in commerce.
Separate information revealed that gross home product (GDP) remained 9 per cent under its pre-pandemic peak. Companies – which make up the majority of the UK financial system – fell 3.5 per cent and manufacturing was down 2.3 per cent, whereas building grew 0.9 per cent.
Manufacturing declined for the primary time since April as automotive manufacturing dropped considerably, the Workplace for Nationwide Statistics mentioned.
“The UK took a notable hit in January, albeit smaller than some anticipated, with retail, eating places, colleges and hairdressers all affected by the most recent lockdown,” mentioned Jonathan Athow, deputy nationwide statistician for financial statistics.
Alpesh Paleja, lead economist on the Confederation of British Trade (CBI), mentioned: “Exercise fell in January, as broadly anticipated, with a lot of the UK getting into some type of lockdown at the beginning of the yr.
“Nonetheless, the decline was notably smaller than the primary lockdown in spring 2020, demonstrating the rising skill of companies and households to adapt to higher restrictions on mobility.”
Commerce figures present exports of products to the EU fell £5.6bn in January as companies sought to adapt to new buying and selling preparations after Brexit.
In comparison with the earlier January, items exports to the EU had been down 38 per cent whereas non-EU items exports fell 8 per cent.
Important declines had been registered throughout all sectors with meals and reside animal exports to the EU among the many worst affected, falling 54 per cent. Fish & shellfish exports collapsed by 83 per cent in comparison with January 2020 from £92m to £16m.
Meals exporters have been confronted with further paperwork and security checks which have triggered important disruption.
Imports additionally fell, by £8.9bn general (21.6 per cent), whereas imports from the EU dropped £6.6bn (28 per cent), the figures present.
The ONS suggested warning when evaluating the month-to-month figures as a result of they are often erratic and adjustments to information assortment imply some data on exports might not but have filtered by means of. The autumn could possibly be exaggerated by stockpiling of products earlier than the 31 December finish of the transition interval, the ONS mentioned.
Regardless of the sluggish begin for commerce in January 2021, current survey information means that importing and exporting started to extend in the direction of the top of January.
British Chambers of Commerce (BCC) head of economics Suren Thiru mentioned: “Whereas adjustments in information assortment restrict historic comparisons, the numerous droop in UK exports of products to the EU, significantly in comparison with non-EU commerce, gives an ominous indication of the injury being executed to post-Brexit commerce with the EU by the present border disruption.”
David Frost, who negotiated the UK’s commerce cope with the EU and is now Brexit minister sought in charge different elements together with pre-Christmas stockpiling and “Covid lockdowns throughout Europe” for the dramatic droop in commerce.
“These results are beginning to unwind,” he argued, including: “Freight volumes between the UK and the EU have been again to their regular ranges for over a month now, i.e. for the reason that begin of February.”
A authorities spokesperson mentioned: “A novel mixture of things, together with stockpiling final yr, Covid lockdowns throughout Europe, and companies adjusting to our new buying and selling relationship, made it inevitable that exports to the EU could be decrease this January than final.
“This information doesn’t mirror the general EU – UK buying and selling relationship publish Brexit and, because of the laborious work of hauliers and merchants, general freight volumes between the UK and the EU have been again to their regular ranges for the reason that begin of February.”