Following Brexit, there was a steep drop off in the January period for exports to the EU. There was bound to be some disruption with new processes and rules, but thankfully, February has shown a partial recovery and as companies adjust to the new requirements. The statistics produced by the ONS showed a 42% slump for the first month of the year, but thankfully we have seen a 46.6% rise from £3.7 billion to £11.6 bn. Businesses say the decrease in trade was more concerning than expected; however, we must remember that COVID-19 caused further disruptions requiring tests and holding periods for drivers crossing the English Channel. Add to this a stockpiling exercise in December 2020 where businesses over-ordered to ensure they had the stock before the new rules took hold, which in turn led to a pretty abysmal January.
Promising Growth Shown
The chairman of the Federation of small businesses, Mike Cherry, expressed a concern that members require more assistance and support during this period. He is concerned about the way that sales fell off when compared with the previous year. However, the government opinion is that February has demonstrated good bedding in and now offers welcome growth. They maintain that they are fully committed to assisting any business still struggling with the changes and are available to ensure that trading within the EU can continue under the new rules.
For the government and the traders to have a differing opinion on how badly affected the situation has become is not uncommon. The Chief Executive of British Cornershop, Mike Callahan, spoke of his concern as his firm struggled with solutions that would enable them to maintain the exportation of the British food and drink brands that are the cornerstone of their business. Their product range originally featured over 10,000 Lines, but due to new exporting regulations, they have been forced to cut this down to just 1400 products. For them, he said the situation would require them to consider having a distribution centre within the EU which will be a loss of over 40 jobs here in the UK. It will create 60 jobs in the EU, but this is damaging and disrupting for businesses here in Britain. They have already lost 40 staff because of the drop in sales they’ve already experienced.
The Economy Will Pick Up
The new trading arrangements seem to be a tale of two sides; Sarah Hewin from the Standard Chartered bank explained to the Today program for the BBC that the economy in the UK was picking up. With vaccinations rolling out and lockdown being eased, people are finding more confidence to leave their homes and start to spend money again. This will offer a considerable boost to the economy. The data provided for January from the Office of National Statistics also indicates that the estimate for the expected drop in the Gross Domestic Product was 2.9% when it only fell by 2.2% in actuality in January.