Sun 24 January 2021

Brexit is stoking an international trade crisis while exports are being pummelled by the pandemic, reports Sam Bright

Exports to the European Union fell by 13.5% in the months leading up to Brexit, new Government figures reveal.

Statistics released by the Department for International Trade (DIT) last week show that UK exports to the EU fell by £39.8 billion in the three months between July and September 2020 – from £294.9 billion in the equivalent period in the previous year to £255.1 billion this. Exports to EU countries currently account for 40.8% of all UK exports.

Meanwhile, total trade with the EU declined by a whopping 16.9%, or £112.5 billion, during the period.

Despite this economic shock, the UK has since signed a Brexit deal with the EU that has already caused disruption to trade and is expected to do more damage in the coming weeks.

Indeed, the Prime Minister’s trade deal with the EU creates a separate regime for Northern Ireland and the rest of the UK, with the former benefitting from closer customs arrangements with the continent. However, this process has effectively created a border down the Irish Sea, since the two territories are now governed by different rules.

This has already created problems. There are shortages of food at Northern Ireland supermarkets as suppliers struggle to navigate the new post-Brexit rules. Marks & Spencer alone has temporarily withdrawn more than 300 products in Northern Ireland. Other suppliers, meanwhile, have decided to entirely cease operations in Northern Ireland in the short-term “until the teething issues are sorted out”, the Road Haulage Association said.

“There are customs experts with 30 years’ experience who are baffled by what the new regulations mean,” Stephen Phipson, CEO of manufacturing body Make UK told the BBC’s Lewis Goodall. “Let alone small or medium-sized businesses that have never had to deal with the kind of paperwork required.”

And it doesn’t look like things are set to improve imminently. Speaking last week, Cabinet Office Minister Michael Gove said that, while the Government was “ironing out” issues in the system, “things will get worse before they get better”.

Last week was a quiet one for many ports – as the deployment of stockpiles reduced the need to import goods. However, freight will begin flocking into harbour again this week, testing the UK’s decidedly ropey new systems.

As reported by Byline Times last week, a complex new VAT regime has caused many EU suppliers to stop trading in the UK altogether as they are unwilling and unable to absorb the costs of additional red tape. A Dutch company called Bike Bits described the policy change as “ludicrous” in a statement on its website.

This threatens to wreak havoc on supply chains that rely on the smooth exporting and importing of goods, supply chains that have already been severely disrupted during the Coronavirus pandemic – just ask French lorry drivers.

As the DIT statistics show, it is not just EU exports that have been hit during this crisis. Exports to non-EU countries also fell by 3.2% from July to the end of September – while total trade fell by 9.4% or £68.8 billion.

Byline Times asked the Government whether it was responsible to sign a Brexit deal that is expected to further disrupt trade between Europe and the UK, given these circumstances.

A spokesperson said: “The deal will help unlock investment and protect high-value jobs right across the UK, from financial services through to car manufacturing. And we will now take full advantage of the fantastic opportunities available to us as an independent trading nation, striking trade deals with other partners around the world.

“As with any major change there will be challenges and bumps to overcome. But we have laid the groundwork to minimise the disruption.”

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