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BCC: Major room for improvement in trade required

Commenting on the latest ONS UK Trade figures, published today, William Bain, Head of Trade Policy at the British Chambers of Commerce (BCC), said:

A late 2021 upswing in UK goods trade, particularly in chemicals exports to Ireland, doesn’t hide the significant room for improvement in trade needed if the UK is to make the most of recovery from the depths of the pandemic in 2020.

With data from the first full year of the TCA now available, the UK is trading less with the EU, than it was three years ago. This gap is not currently being made up in terms of trade with the rest of the world.

These figures show why the UK Government and European Commission should engage positively with our recommendations to improve the two-way flow of goods and services. To kick-start a trade focused recovery there needs to be further action from policymakers to support UK importers and exporters.”

The latest ONS trade in goods data for December 2021, and last year as a whole, showed a modest recovery, particularly in exports, from the 2020 pandemic dip.

However, this was significantly lower than the trade growth experienced by Germany in 2021. Moreover, comparing 2021 with 2018 shows both goods imports and exports have fallen sharply.

The UK is importing more gas and other fuels from outside the EU over recent months. Increased exports to the EU in late 2021 were driven by higher exports of fuels, chemicals and machinery and transport equipment.

A similar position applied in terms of non-EU trade. Agri-food, machinery and transport equipment, and material manufactures exports to the EU are essentially flat over the last 2 or so years. For non-EU exports while agri-food and chemicals remained flat over the last 2 or so years, material manufactures exports rose while machinery and transport equipment exports fell (by £1.2bn).

Taking a longer comparison between Q4 2021 and Q4 2018 reveals drops in goods exports of 5.3% and imports of 0.1%.

Taking 2021 UK Trade as a whole, although there was a good recovery compared with the depths of the pandemic in 2020 - in goods exports of £14.5bn (4.9%) and imports of £36bn (8.4%) - the comparison with this week’s German trade data over the same period shows room for further UK improvement.

Comparing 2021 in UK goods trade with 2018 further supports this - with exports £36.8bn (10.5%) lower in 2021 than in 2018 and imports £23.4bn (4.8%) lower in 2021 than in 2018.

UK car export values to Germany were 36% lower in 2021 than in 2016 and of other road vehicles some 23% lower in value over the same period. Export values of medicines and pharmaceuticals to Germany declined by 47% over the same period.

The ONS found no evidence of stockpiling prior to the changes in GB inbound border controls in January 2022 but did find the concern of new costs and paperwork upon UK traders connected with the shift to the (EU-UK) Trade and Co-operation Agreement remained high at the turn of the year.

The full ONS data can be found here.

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