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Britain shakes off fears of post-Brexit trade collapse

·3-min read
High street
High street

The UK shrugged off fears of sustained post-Brexit trade disruption as imports from outside the EU hit a record high in April and trade with the bloc recovered further.

Britain imported £20.1bn of goods from beyond the EU in April, the most on records going back to 1997, according to the Official for National Statistics.

Meanwhile, companies sold £12.9bn worth of goods into the bloc, nearly 10pc higher than before pre-Brexit stockpiling began to skew figures at the end of last year.

Imports from the bloc also rose, but remained markedly below pre-January levels.

Thomas Pugh from Capital Economics said a “slower recovery in the eurozone and lingering Brexit effects” were hampering a recovery in trade with the EU, “which will probably continue to lag behind the broader recovery”.

The continued climb in exports suggests companies have largely adapted to a wave of new regulations introduced by the Brexit deal, although industry bodies continue to report problems.

Overall, goods trade with the EU is about a fifth below pre-pandemic levels this year, with much of the shortfall on the imports side. Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics, said exports into the bloc were also about 9pc lower than 2019’s pre-pandemic levels.

“That is a disappointing performance, given the boom in global trade flows,” he said. “UK exporters have lost market share.”

Meanwhile the UK’s economic recovery gained pace in April as non-essential retailers and outdoor hospitality re-opened and more pupils returned to on-site schooling.

GDP climbed 2.3pc during the month – the fastest rise since July 2020, but slightly below economists’ expectations for 2.4pc growth.

Overall output remains 3.7pc below the pre-pandemic levels seen in February last year, but has topped its previous recovery peak in October.

The dominant services sector provided the biggest uplift, with output growing 3.4pc during the month.

Consumer-facing services surged as restrictions were eased, rising 12.7pc. Retail, education and hospitality were the fastest-growing sectors, with some bars and restaurants able to begin serving customers outdoors.

Economists have raised their expectations for the UK's recovery in response to a strong vaccine rollout, signs of pent-up demand and lower-than-expected unemployment.

The Organisation for Economic Co-operation and Development raised its growth projection last month, saying UK GDP is likely to grow 7.2pc this year, the fastest rate among rich nations and ahead of global growth of 5.8pc.

It expects economic activity to return to pre-pandemic levels by the middle of next year, in line with Italy and Canada but ahead of the US, China, Japan and Germany.

Recent data has shown how the UK’s economic resilience has grown during the pandemic, with output dropping only slightly at the start of the year despite the lockdown.

Mr Pugh said:The jump in GDP in April was another sign that consumers are raring to spend as the economy reopens. And all the early indicators suggest that GDP growth was strong in May as well.”