UK exports of goods to the EU have fallen off a cliff since Brexit costing the British economy a whopping £5.6 billion.
According to new figures released today from the Office for National Statistics (ONS) exports to the EU plummeted 40.7 per cent in January while imports from the bloc fell by 28.8 per cent.
These declines represented the sharpest drop in British trading since records began in 1997, marking a tough first month for the UK after officially leaving the EU customs union at the start of the year.
The hardest hit sector was food, seeing exports to the EU decline 63.6 per cent in January as manufacturers grappled with new layers of red tape.
Overall, the decline in exports is thought to have cost the economy £5.6 billion, while the drop in imports represented a £6.6 billion decline.
Trade outside of the EU was more positive, rising by 1.7 per cent or around £200 million as traders looked outside of the bloc for new customers.
Despite the drop in trade, the wider economy performed relatively well contracting 2.9 per cent in January, significantly less than analysts’ estimates of 4.9 per cent.
“The significant slump in UK exports of goods to the EU, particularly compared to non-EU trade, provides an ominous indication of the damage being done to post-Brexit trade with the EU by the current border disruption,” head of economics at the British Chamber of Commerce Suren Thiru said.
“The practical difficulties faced by businesses on the ground go well beyond just teething problems and with disruption to UK-EU trade flows persisting, trade is likely to be a drag on UK economic growth in the first quarter of 2021.”
It comes after de-facto Brexit minister David Frost moved to extend the transition period on customs check in Northern Ireland without consulting his counterparts in Brussels, while accusing them of sulking over Brexit.
This move means that there will now be no new checks on supermarket goods, parcels or medicines moving from the UK to Northern Ireland for six months, aimed at helping businesses adapt to the new rules.
This escalation in tensions, which the Cold Chain Federation logistics lobby said was“terrible for food supply chains”, caused the EU to threaten to sue the UK.