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Using our Macroeconomic trade data to look at the impact of
Brexit, the UK trade deals made so far and the prospects for the
future.
After a long, multi-year process, the UK finally left the EU in
January 2021 with the EU-UK Trade and Cooperation Agreement. Along
with this deal, the UK had also agreed deals to continue trading as
normal with 63 of the 70 non-EU countries with whom trade was
previously covered for the UK by EU trade deals (Learn more). Any countries with
deals not rolled over ended on 31 December and are now subject to
WTO terms.
Beyond the deal with the EU and the agreement to roll over some
existing agreements, the government has been engaged in many
negotiations surrounding new trade deals. Other deals signed to
date include:
An application to join the Comprehensive Progressive Agreement
for Trans-Pacific Partnership (CPTPP) [ii]
Trade deal between the UK and Kenya (Signed on the 8 December)
which may be extended to Burundi, Uganda, Rwanda, South Sudan, and
Tanzania to protect the EAC [iii]
UK and Cameroon trade deal signed in March 2021 [v]
Deal signed in March 2021 with Albania as the first European
State outside the EU [vi]
Canada-UK TCA entered into force on April 1, 2021 [vii]
Key deals that are being negotiated currently include Mexico,
India, US, New Zealand & Australia.
First Month Post BREXIT
January was the first month of trade after the exit from the EU.
The news headlines at the start of March spoke of shock 40% drop in
the value of UK exports to the EU as border checks slowed down
trade. UK trade statistics reveal the true extent of this
decline.
From analysing UK HMRC customs data, we see significant drops in
UK trade with the EU in January 2021. Exports are down almost 50%
with imports also substantially hit. Looking at the UK's Top Ten
Export partners by value in 2020 we can see all of them, except for
China, have been hit with decreases in trade.
Looking at the commodities, and hence industries, most affected
by this drop we can see serious impacts across many industries.
When looking at the Top Ten commodities in terms of value exported
from the UK to the EU in 2020, there are significant declines
across all sectors, with Organic Chemicals and Pharmaceutical
Products having the highest declines at over 80 and 78%
respectively.
The commodities showing the highest drop in volume from December
2020 to January 2021 are shown below. We observe a significant drop
in volumes of UK exports of a range of agricultural products such
as Dairy Produce, Meat and Fish products and Cereals.
There is some positive news as some countries showed increases
from December to January. For Example, the UK showed increases in
exports to Cambodia, Ghana, Mozambique, Nigeria, Panama, and
Vietnam. Additionally, the flurry of trade deals signed by the UK
represent significant opportunities for both UK imports and
exports. The deals with Japan, Canada, Kenya, Ghana, Cameroon, and
Albania represented $41 Billion in trade in 2020.The deal currently
being sought with the CPTPP represented $81 Billion in trade in
2020. Deals with India and the US represented $11 Billion and $114
Billion respectively in 2020. The top commodities by value for
trade between the UK and these countries are shown below.
As we look forward, UK trade with countries outside of the EU
may become more important. The graph below shows that UK trade with
non-EU countries did not suffer the same drastic drops in January
2021 as trade with EU. If the trade with the EU continues to
struggle in 2021, it will be interesting to observe whether trade
with non-EU countries shows a growth to fulfil this deficit.
