UK economy in turmoil as exports to EU plunge by 41%

Exports of UK goods to the European Union came by more than two-fifths in January as the Brexit transition period came to an end.

New figures from the Office for National Statistics (ONS) show that overall exports in the UK fell by lb5.6 billion – 19.3 per cent.

It was driven with a lb5.6 billion, or 40.7 per cent, plunge in exports of goods towards the EU, the ONS said.

Imports also fell, by lb8.9 billion overall (21.6 percent), while imports from the EU dropped lb6.6 billion (28 percent), the figures show.

Transition period

The end from the transition period coincided using the spread of a new strain of Covid-19 in the UK, causing lorry drivers to want tests to cross the border at the English Channel.

Another national lockdown was also imposed at the outset of the month.

Since then, other measures show that trade levels have in part recovered.

Companies had been stockpiling ahead of the end of the transition period, and may also have used their stock rather than buying new goods in January.

Because the value of imports fell a lot more than exports in January, the trade deficit for that month narrowed by lb3.7 billion to lb1.9 billion.

Economy ‘in reverse’

Meanwhile the UK economy in general shrank again in January because the latest round of national lockdowns and restrictions over the Covid-19 pandemic became predominant.

Gross domestic product (GDP) declined by 2.9 per cent month on month in January, reversing an increase of just one.2 percent between November and December, work for National Statistics (ONS) said.

GDP remained 9 per cent below its pre-pandemic levels in January.

The services sector took the brunt from the fall, shrinking by 3.5 percent in January as rafts of hospitality and leisure firms were forced to shut because of new lockdown restrictions.

The sector has become 10.2 per cent smaller than it had been in February 2021, before the impact of the pandemic was initially fully felt.

Construction grew by 0.9 per cent throughout the month as its recovery continued and new work arrived.

But the development sector fell by 1.5 percent in January 2021, after manufacturing contracted the very first time since last April – down 2.3 percent – according to the figures.