UK exports to the EU boomed 4.4% in July

UK exports to the EU boomed 4.4% in July

14 Sep    Finance News, In Business

There was varied economic news this week, as the Government’s Office for National Statistics (ONS) released July’s economic figures. The UK’s economy shrank by 0.5% and imports also fell 0.4%.

However, the international delivery expert ParcelHero says one bright light among the gloomy data is that the UK’s goods exports to the European Union (EU) rose 4.4% (after taking inflation into account).

ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘Britain’s July exports to the EU soared by £0.5 billion over June, to £15.3bn. At the same time, our exports to non-EU countries decreased by £0.2bn (-1.3%). So is this data showing many of the Brexit-imposed restrictions are now having less impact?

‘If we travel back in time to the pre-Brexit, pre-pandemic Britain of 2019 we can begin to compare results. The UK’s exports of goods to the EU in the July preceding Brexit (July 2019) were worth £13.7bn so, comparing July 2019 and July 2023’s results, there has actually been a £1.6bn rise in the value of Britain’s monthly EU exports.

‘Of course, that comparison doesn’t consider inflation. According to the Bank of England’s inflation calculator, July 2019’s EU exports of £13.7bn were actually worth around £16.6bn today in real terms. Of course, this isn’t really a fair comparison, as the calculation is based on the UK’s Consumer Price Index (CPI) and doesn’t take into account changes in the relative value of the euro, for example.

‘More concerning is the fact that Britain’s EU exports have actually fallen year-on-year. Despite this February’s Windsor Framework Agreement, which helped thaw Britain’s trading relations with the EU significantly, our exports are actually down on last July’s figures. Last July, Britain exported £17.7bn of goods to the EU – admittedly a record-breaking high.

‘In some ways, Britain’s post-Brexit recovery can be described as “two steps forward, one step back”. More positively, there are some interesting “wins” in this month’s EU export data. Britain’s exports were, quite literally, fuelled by a £0.4bn rise in exports of fuels. The rise was because of increased exports of crude oil to the Netherlands and France and refined oil to Belgium.

‘Doing further heavy lifting for Britain’s economy, there was also a £0.2bn increase in exports of machinery and transport equipment to the EU. Increases in mechanical power generators and mechanical machinery sales to the Netherlands were the main contributors.

‘ParcelHero’s analysis is that trading issues do seem to be settling down for larger exporters shipping to the EU, albeit with new red tape and Customs fees, particularly for products whose components (eg microchips) are sourced outside of the UK.

‘However, the full impact of all the expected Brexit border regulations have yet to bite, and we hope that both the EU and the UK can be pragmatic in reaching a solution to some of these issues. We think the scrapping of plans for the controversial “UKCA” CE-replacement mark, on the majority of products, should serve as a good model for the future.

‘Meanwhile, July’s drop in exports to non-EU countries is a cause for concern. The US remains the UK’s single largest individual overseas market. While the UK’s trade with the USA has not suffered a similar upheaval, some significant hurdles in US trade remain.

‘Most UK goods exported to the US that are valued at over $800 (the US import tax threshold) are still subject to tariffs of 0% to 37.5%, with the typical rate being 5.63%.

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