Trade between the UK and Germany slumped in January amid the economic fallout from Brexit and the Covid-19 pandemic in the first month after leaving the EU, according to official figures.
Germany’s federal statistics body said imports from the UK fell by more than 56% to €1.6bn (£1.4bn) in January from the same month a year ago, after the end of the Brexit transition period and start of the new trading relationship between Britain and the EU.
In a reflection of disruption at the start of the year from new customs checks and border delays, German exports to the UK also dropped by 29% to €4.3bn. The figures suggest a disproportionate impact on UK-German trade in Januarycompared with other nations, with import and export activity down by just 6% for other EU states by comparison. Exports to other non-EU countries besides Britain fell by 10.3% and imports by 13.9%.
The first official snapshot comes after businesses and road haulage bodies warned export volumes had collapsed in January under the first month of the Brexit trade deal agreed between Boris Johnson’s government and Brussels.
The government has admitted there were “teething problems” affecting cross-border trade at the start of the year. But rather than the problems being just early issues that will fade as firms adapt, company bosses say higher costs and delays are an endemic feature of Brexit and stand as a permanently higher cost of doing business with the EU.
Economists said a reduction in trade volumes between Britain and EU nations was to be expected in January after companies stockpiled goods in the lead-up to the Brexit deadline on 31 December, meaning they would not need to make as many shipments at the start of the year. UK trade has also been disrupted by the toughest coronavirus restrictions since the first wave of the pandemic.
But James Smith, economist at the Dutch bank ING, said stockpiling alone was not enough to explain the decline. “There is for sure an impact from Brexit disruption,” he said.
“The interesting question at this point is whether they were just teething issues, and we will see a rebound in February, or whether it’s a sign that firms are genuinely struggling. I think it’s a bit of both.”
Surveys of business activity show UK manufacturers experienced further supply chain disruption as a result of Brexit and Covid last month, with firms reporting the third biggest rise in supplier delivery times on record since 1992.
Official UK figures for imports and exports in January will be published by the Office for National Statistics on Friday.
Alongside the early German snapshot, Smith said figures for UK exports to Italy showed a 70% decline from a year ago, and a drop in France of about 20% between December and January. “It’s a similar picture everywhere,” he said.