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Summary
- UK’s exports to the EU fell by a record 40.7 per cent in January due to Brexit, stockpiling and lockdown restrictions.
- ONS reported the UK economy contracted by 2.9 per cent, better than previously predicted.
The Office for National Statistics (ONS) revealed that UK’s exports to the EU fell by a record 40.7 per cent, or by £5.6 billion, in January compared to December due to Brexit, lockdown restrictions, and stockpiling. The export decline was the biggest in over 20 years. However, imports also made another record falling by 28.8 per cent or by £6.6 billion.
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Manufacturing declines
The manufacturing sector fell by 2.3 per cent in January on a month-on-month basis, declining for the first time since April 2020. The nine of the sector’s thirteen subsectors reported a fall in output for the duration.
The car industry was severely impacted, and car manufacturing for export markets fell by 29.1 per cent for the reported month, while the food and live animal industry was the most affected, with exports declining by a whopping 63.6 per cent in the period as it also includes seafood. Moreover, the sharp fall in exports to the EU resulted in the UK’s exports to the rest of the world to drop by £5.3 billion or 19.3 per cent in January.
While Brexit’s impact on the trade disruption was hard to quantify, ONS said the slower trade could be attributed to the transition period due to external factors.
Moreover, ONS said a separate business survey found trade levels increased by the end of January. Britain's overall goods trade deficit, which also included non-EU nations, fell to £9.826 billion in January from £14.315 billion in December.
GDP contracts
The ONS said the UK economy contracted by 2.9 per cent, its worst since lockdowns began a year ago, due to lower economic activity amid lockdown restrictions. However, the contraction was less severe than the predicted figure of 4.9 per cent of contraction.
The ONS expected UK’s GDP to grow by 4 per cent in 2021, and a growth of 7.3 per cent in 2022. The broader index FTSE 100 stood at 6,746.63, up by 0.14 per cent as of 12 March at 1.49 PM GMT+1 following the news.
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