Exports to the European Union bounce back following slump in trade after Brexit
Exports to the European Union have bounced back following a slump in trade after Brexit.
Britain sold £14.2billion of goods to the bloc in May, a rise of £1.1billion or 8.8 per cent since April, according to figures from the Office for National Statistics.
The May haul was the biggest since October 2019 and followed a sharp fall in trade after the UK finally left the EU at the end of 2020. In January, goods exports to the EU fell to £7.9billion.
On a roll: Britain sold £14.2bn of goods to the European Union in May, a rise of £1.1bn or 8.8 per cent since April, according to figures from the Office for National Statistics
But the recovery makes a mockery of claims that Brexit has done irreparable damage to British exporters.
Exports of goods to the rest of the world were also up 5.5 per cent to £15.2billion, the highest level since January 2020.
However, imports from the EU to Britain totalled £18.5billion. While that was the most this year, it was still well below pre-pandemic and pre-Brexit levels and less than the £19.4billion of goods shipped in from the rest of the world.
Britain typically imported more than half of its goods from the EU until January this year when new barriers to cross-border trade went up as a result of Brexit.
A separate report from the ONS showed a global shortage of microchips has hit car production in the UK and held back the recovery from the coronavirus recession.
The ONS said output in the ‘manufacture of transport equipment’ tumbled by 16.5 per cent in May – the biggest fall since April last year when the first lockdown hammered business.
The slump came as ‘microchip shortages disrupted car production’, the report added. Other areas of the economy performed better in May, with the ‘accommodation and food services’ sector growing by 37.1 per cent following the reopening of pubs, restaurants and hotels.
But overall, gross domestic product rose by just 0.8 per cent following a 2 per cent leap in April.
That was much weaker than the 1.5 per cent growth expected by economists and means the economy was still 3.1 per cent smaller than it was before the pandemic struck.
Paul Dales, an economist with Capital Economics, said: ‘Of course, the pace of the recovery was always going to slow as the economy climbed back towards its pre-crisis level. But we hadn’t expected it to slow so much so soon.’
Britain suffered one of the biggest hits from the pandemic among advanced economies last year with output falling nearly 10 per cent – the sharpest decline for over 300 years.
The Bank of England expects the economy to grow by 7.25 per cent this year, the fastest annual growth since 1941 when Britain was rearming during the Second Word War.
But a shortage of computer chips is wreaking havoc in the world of manufacturing as they are now crucial in smartphones, computers, cars and even fridges.
Supply chains have been hit by the pandemic.