Yahoo Finance UK post-Brexit trade rises as NI talks hang in balance
The UK’s trade deficit narrowed in April with record imports from outside the EU and a recovery in business with the European Union (EU) as lockdown restrictions eased across Britain.
According to figures from the Office for National Statistics (ONS) on Friday, imports from outside the EU hit an all-time high of £20.1bn ($28.5bn) worth of goods during the month, the most since records began in January 1997.
Imports from the bloc rose slightly on the month, however, this still remained below pre-Brexit levels.
The total trade balance narrowed to a £935m deficit from March’s deficit of £1.97bn, while the goods trade deficit also contracted from £11.7bn to £10.9bn.
Exports to the bloc stood at £12.9bn, almost 10% higher than September last year and up from £12.7bn in March, shaking off disruptions following Britain’s exit from the EU.
But this was still around 9% lower than 2019’s pre-pandemic levels and below the £13.6bn posted for December 2020 which was boosted by stockpiling before the UK left the EU on December 31.
“That is a disappointing performance, given the boom in global trade flows,” said Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics. “UK exporters have lost market share.”
Read more: EU threatens trade war after Brexit talks fail to break deadlock
EU imports to the UK came in at £18.4bn in April, up from March's £17.8bn. However, this was again lower than the December 2020 level of £22.7bn. April's figure was also 18% below the 2019 average.
The ONS said on Friday: “Trade with non-EU countries continues to be higher than with EU countries in both imports and exports. However, with the ongoing coronavirus pandemic and recession, it is too early to assess the extent to which this reflects short-term trade disruption or longer-term supply chain adjustments.”
Exports of iron and steel boosted the latest data, delivering a 2% gain in merchandise exports to the EU in the month. Palladium imports also soared to meet demand from a recovering car industry which has been hit with a global semiconductor shortage.
Danni Hewson, AJ Bell finance analyst, said: “The latest trade figures pose a number of questions but the biggest is - have our trading patterns changed forever following Brexit or are we just seeing the short-term effects of stockpiling and supply chain adjustments? What’s clear from the latest figures is that in April the UK was doing more trade with non-EU countries than with EU countries.
“The pandemic has almost certainly played a huge part. Lockdowns and travel restrictions have affected supply and demand, and this is always a picture full of moving parts.
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Insurance company Euler Hermes estimates that Germany will export goods for around $320bn (£226bn) more than it did last year, with China and the US doing more still, while the UK will only export additional goods for around $16bn dollars, putting it on par with Saudi Arabia and behind Turkey, South Africa and Vietnam.
It comes as the UK and EU are in negotiations about the post-Brexit Northern Ireland Protocol.
European Commission vice-president Maros Sefcovic said talks were at a “crossroads” as pressure rises to agree on a deal to avoid a potential trade war, or unionist anger in Northern Ireland.
Britain is asking for the EU to take a less bureaucratic interpretation of the Northern Ireland Protocol to ensure the free flow of goods within the UK, while Brussels is concerned about goods entering its single market without meeting the proper requirements.
“The problem we’ve got is the protocol is being implemented in a way which is causing disruption in Northern Ireland and we had some pretty frank and honest discussions about that situation,” UK-EU minister David Frost said on Thursday.
“There weren’t any breakthroughs. There aren’t any breakdowns either and we’re going to carry on talking.”
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