UK food and drinks exports to EU collapse

Britain’s exports to the European Union fell by 47% in the first quarter of the year compared to the corresponding period in 2020, with sales to Ireland down by more than 70%.

UK food and drink exports to the European Union (EU) fell by 47% in the first quarter of the year compared to the corresponding period in 2020 “as a result of the on-going impacts of COVID-19 and changes in the UK’s trading relationships” and are down £2 billion in value terms versus Q1 2019, according the latest figures from the Food and Drink Federation (FDF)

UK exports to nearly all EU member states fell significantly in Q1 with sales to the Republic of Ireland – traditionally the sector’s biggest export market –down by more than two thirds (-71%), while those to Germany, Spain and Italy declined by more than half since Q1 2020.

The FDF’s head of International Trade, Dominic Goudie, said the loss of £2 billion of exports to the EU “is a disaster for our industry, and is a very clear indication of the scale of losses that UK manufacturers face in the longer-term due to new trade barriers with the EU.

“We set out a plan to mitigate these impacts by boosting support for exporters, and this was backed by the Trade and Agriculture Commission. The Government must stop prevaricating and get behind these proposals to help exporters that have been shut out of trading with the EU.”

For his part, John Whitehead, of the Food & Drink Exporters Association (FDEA), commented: “Whilst some of this large drop can be put down to end of year stockpiling, significant business has been lost as a direct result of the additional bureaucracy, customs delays and costs of trading with the EU. Experienced FDEA members are continuing to battle against inconsistent interpretations of regulations across the EU and having to weigh up whether the time and cost involved is sustainable. We fully support the FDF in pressing Government to boost support for exporters.”

UK food and drink imports from the EU were down 10% on Q1 last year, “driven by a number of factors including the continued closure of the UK’s hospitality sector, stockpiling in late 2020, reduced demand for ingredients as a result of the decline in exports to the EU, and import substitution,” the FDF noted. It said the fall in EU imports was set to worsen further when full checks are implemented at UK borders in 2022.

Bad news for road hauliers

The sharp decline in shipments amounts to more bad news for road hauliers who have experienced a tough start to the year on UK-EU routes following Brexit, with road freight volumes well below the levels normally seen.

In an interview with Lloyd’s Loading List earlier this month, the Road Haulage Association’s (RHA) managing director of Policy and Public Affairs, Rod McKenzie, said: “The downturn in (UK-EU) trade obviously translates into fewer trucks that are crossing the Channel compared to pre-Brexit and however much the government might want to dress this up, there is a problem here which is of considerable concern to the trading companies who are hauliers’ customers.”

He added: “Some (haulage) firms have certainly lost money from their bottom line. Others have changed their business model. It’s hard to generalise when all this cross-Channel trade is so diverse. Everyone’s got a different story.”

Wider UK-EU trade decline

Global trade between the UK and the EU fell by almost a quarter in the first three months of the year as Brexit and the COVID-19 crisis disrupted businesses, according to figures published by the Office for National Statistics (ONS) at the end of last month

This was far larger than the 0.8% drop recorded for trade between the UK and the rest of the world, suggesting new Brexit rules had a significant impact at the start off the year. The period saw trade between the UK and EU fall behind the country’s trade with the rest of the world for the first time.

The ONS said that trade with Europe had come under pressure from border disruptions after the Brexit transition period ended.

However, it underlined that disruption from the COVID-19 crisis and a slowdown in the global economy meant it was “too early to assess the extent to which the transition period reflects short-term trade disruption or longer-term supply chain adjustments”.

Although Britain’s exports to the EU fell by a record 43.2% in January, the figures suggest that companies have overcome the worst of the disruption.

Businesses on both sides of the Channel suffered severe disruption at the start of the year as they grappled with new customs paperwork, but goods exports to the EU in March rose by 8.6% to £12.7 billion, which is not far short of the £13.7 billion recorded in December, before Britain’s departure from the single market.

Source: lloyd´s