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British exports to EU return to pre-Brexit levels

UK exports to the European Union have returned to pre-Brexit levels in recent months, according to official data.

The Office for National Statistics (ONS) said on Thursday that exports to the EU returned to “pre-EU exit levels” in May and June. Exports rose 9.1% in May to £14.1bn and 1.2% in June to £14.3bn.

“The export data has been driven by increased sales to the EU (by 1.2%) as demand picked up following the release of lockdowns and the unbundling of pre-Brexit stockpiles, as firms begin to reorder,” said William Bain, head of trade policy at the British Chambers of Commerce. “By contrast non-EU exports fell by 5.6% between May and June this year.”

The data suggests that logjams at the border caused by new rules and paperwork could be beginning to ease. However, the ONS urged caution in over-interpreting the numbers.

“Exports to the EU overtook non-EU countries in May 2021 and remain higher in June 2021. However, monthly data are erratic and small movements should be treated with caution,” it said. “With the ongoing pandemic and recession, it is too early to assess the extent to which this reflects short-term trade disruption or longer-term supply chain adjustments. We will assess this over the coming months.”

Bain said Brexit changes appeared to be providing a “dampening” effect on trade despite rising EU exports.

Compared with Q2 2018, the last stable period before EU exit, total exports, including the EU, were down by 4.4% and imports by 2%,” he said. “Comparing June 2021 with June 2018, total UK exports (including to the EU) were down by 7.4% and imports by 2%.

“This is a further signal of the dampening effect on EU-UK trade caused by the move to the new trading arrangements under the TCA [Trade and Cooperation Agreement]. We will continue to monitor this over the coming months as further data emerges.”

Imports to the UK from the EU rose by £500m in the second quarter but imports from outside the EU continue to be higher. The UK imported goods and services worth £19.9bn from the rest of the world, compared with £19.2bn from the EU.

“The rise in EU imports was largely down to more cars coming into the UK,” said Bain. “By contrast car exports to non-EU countries saw falls over the last few months, partly explained by staff and semiconductor shortages.”

Total UK exports fell by £600m in June, hit by declining demand for medical products and a slowdown in car exports. Total imports increased by £1bn, driven by demand for cars. The dynamic left the UK with a worsening trade deficit of £5.7bn in the second quarter.

Bain said the deficit showed “more action is needed to promote export-led growth”.

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