Trade flows recovered but still lagged behind the rebound in world trade
As the political debate rages on, we will have another month of data this week on the development of trade between the UK and Europe – although so far the evidence is mixed.
One thing is clear is that the situation has improved significantly since January. At the time, couriers had stopped shipping between the UK and the mainland due to tons of incorrect documents, while the Covid-19 border closures in December were still wreaking havoc. Since then, the proportion of companies saying they cannot export from the UK at all or face “serious disruption” has gradually declined, according to a bi-weekly survey by the ONS.
The situation has improved significantly since January
But as to how much trade has recovered since January, the picture is less clear. In March and based on statistics produced in the UK, we know that UK exports to the EU had regained most of the ground lost since December. France’s April data also suggests further improvement. Admittedly, imports have been slower to recover, but again, they were less affected by the changes in January as the UK postponed the implementation of controls on its side, as well as businesses heavily. stored in the fourth quarter of last year.
Take a look at data from Eurostat (the EU’s statistics agency), however, and the picture of UK exports to the EU is less rosy. By this measure, trade is still down more than 20% from December, but more importantly, it indicates UK shipments are lagging when global trade picks up. The graph above shows this to be true across a range of major categories. The chart below, courtesy of our International Trade team, shows that the UK is similarly lagging behind in the trade volumes tracked by the CPB monitor.
With figures produced in the UK and EU so far providing a very different picture of the recovery, we will have to wait a few more months for a clearer picture (although for some reasons, Eurostat figures are perhaps currently the more useful of the two).