Brexit and Exports; The Story So Far…

BY:

Tim Hiscock

30 September 2021

Is it too early to be asking how Brexit has affected British exports?

We left the EU in January 2020, but it was only on December 31st that we left the Single Market and Customs Union, and it was at that point that trade relations really changed.

From then onwards, goods travelling to an EU country needed an export declaration for the first time in many years. Many products needed additional certificates, declarations or evidence of conformance. We got a trade agreement with the EU, so as long as UK origin could be declared, there have been no tariffs. So, to put it simply, exporting to the EU got a bit harder but not as much as some might have feared.

So, how are exporters coping? That’s the $64 million dollar question! Well, rather more than that really, as we sell £350 billion worth of goods to the 27 countries of the EU each year and the figures are complicated this time, as world trade has been so severely affected by the Covid Pandemic.

Essentially, the value of goods exported to the EU fell in quarter one but made a recovery in quarter two, more or less back to ‘normal’ level. So, just teething problems? Well, not quite. For one thing the effect has been more severe on some industries than others. The food and drink industry has reported a £2billion fall in its first half-year exports to the EU. To take another example, exports of ceramic goods were down by around 10% over the same period but other sectors looked rosier.

There is another way to evaluate the figures that may be more enlightening. Just as the UK economy has been strongly recovering this year, so have the EU27 countries and much of the world in fact. The value of all EU27 imports in the first two quarters of 2021 is higher than at any time in the last ten years so it’s sensible to look at the share of EU27 imports enjoyed by the UK and compare it with previous figures.

The above shows a lower share for the UK than is often quoted. That’s because the above includes goods that EU countries buy from each other, as well as the rest of the world. What is clear is that UK exports lost market share in quarter 1 quite dramatically, by 31%.

We won’t know for sure if that will recover later until all the figures are published but for those EU countries who have published import figures for quarter two, the data is not encouraging. For Germany, there is an apparent loss of market share of more than 15% in the first half of 2022. The figure for The Netherlands is 25% and for Ireland, UK exporters share has fallen by a full 50%.

France, however, bucks the trend. UK companies lost market share in quarter one but then recovered strongly in quarter two to achieve a share not seen since 2019. France may be a special case, as most exports using road transport enter France as their first point of entry to the EU and it’s possible that more goods are being cleared through French customs before moving in free circulation to other EU countries.

So, there’s still some guesswork. We know from the clients that we work with that many companies have been grappling with the new arrangements since the start of the year, but Brexit does make it more complicated to trade with the EU than it was when we were part of the Customs Union. There’s early evidence to suggest that change may be causing British exporters to lose market share. Can that be reversed?

We’ll be keeping a close eye on the numbers, and we’ll let you know what we find.

In the meantime, we’d be interested to know what you think. Do leave us a comment or get in touch.

While you are here you may be interested in some Strong & Herd LLP training courses related to this

topic, we offer a wide range of high quality training courses to support all importing and exporting activities.

Trading with the EU - Customs

Trading with the EU - Trade Matters

Creating a Winning Export Strategy

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