The UK has recorded a record fall in trade with the EU in the first month since the end of the Brexit transition period.
With the UK out of the single market, January of this year saw exports to the EU fall £5.6 billion and imports fall £6.6 billion, according to figures from the Office for National Statistics (ONS).
In percentage terms, exports of goods to the EU plummeted by almost 41 per cent and imports of goods from the union by 29 per cent.
In prices and volumes, it is “the biggest drop in a month since these figures started to be measured in January 1997”, the ONS noted.
The figures paint a picture of an economy struggling with the twin challenges of Brexit and coronavirus, with government restrictions having a clear impact on economic growth.
UK GDP was estimated to have fallen by 2.9 per cent in the month of January, a level 9 per cent below those seen in February 2020, and 4 per cent below October 2020 which was an initial recovery peak after the first lockdown.
Jonathan Athow, a deputy national statistician at the ONS said: “Both imports and exports to the EU fell markedly in January with much of this likely the result of temporary factors.
“Returns from our more timely surveys and other indicators suggest trading began to recover towards the end of the month.”
With the end of the Brexit transition period, the UK left the EU single market on 1 January, which had a major impact trade, already struggling due to coronavirus.
There were huge lines of traffic waiting at ports, and backlogs of orders accumulated since the start of the pandemic.
Meanwhile Brexit meant additional bureaucracy, and sometimes unexpected costs and taxes associated with cross-border trade.
“Some of the decline can be attributed to containment, stockpiling and early problems” with the EU exit, but “it is clear that the Brexit transition has been far from smooth”, said AJ Bell economist Danni Hewson.
“Markets will be watching closely to see if the current friction translates into longer-term changes.”