Boost for Global Britain as UK exports to EU defy Brexit challenges and hit highest level ever
New ONS data shows that British exports to the EU reached their highest ever level due to rising exports of fuels as the bloc continues to import substantial quantities of LNG.
Goods exports to the EU reached £16.4bn in April 2022, their highest level in current prices since the series began in 1997.
Meanwhile, the ongoing war Ukraine drove exports to Russia to their lowest level since 1999.
Despite the record EU trading figures, exporters continue to experience difficulties with the bloc following the end of the Brexit transition period, according to the latest UK trading statistics – for April 2022.
Goods exports to Russia fell from £268m in February to £38m in April while imports from the country have also collapsed – falling from £1,800m in February to £244m in April.
EU v non-EU trade
Businesses in the UK exported a record level of goods to the EU through April driven primarily by increases in machinery and fuels.
“This is down to the UK’s imports of substantial reserves of LNG from countries like Qatar to fill storage sites in continental Europe, driving this uptick, said Jack Sirett, Head of Dealing at Ebury, a financial services firm.
“This unprecedented importing and exporting of fuels is to support Europe through the next Winter given the uncertainty around fuel supplies from Russia because of the ongoing war in the Ukraine,” he explained to City PM today.
“Due to a lack of LNG import terminals in Europe, the UK is a key global importer of the fuel which it then exports to Europe via pipeline, particularly given small storage capability in the UK.”
Jack Sirett
Sirett added: “Despite the record export figures, the regular business insights survey continues to paint a picture of challenging circumstances for businesses trading internationally, particularly with the EU.
Exporters were four times as likely to change the destination of their goods from the EU to non-EU countries than the other way around and half (50 per cent) of those experiencing difficulties in their exporting “said that the end of the Brexit transition was to blame.”
He continued: “Given these challenges, it is unsurprising that companies are investigating global options. We are seeing increasing evidence of many companies, particularly exporters, re-aligning their trading strategies to look towards the US and Latin-America instead. With the UK kicking off trade talks with Mexico last month, we expect to see increased trading activity with the Mencosur countries especially in exports from the food, drink and business services sectors.”
Trade with Russia
Imports and exports with Russia continued to decrease substantially.
The value of goods exported to Russia fell from £268m in February to £38m in April. Imports from the country have also collapsed – falling from £1,800m in February to £244m in April.
“The war in Ukraine has seen governments across the world impose stringent trade restrictions on Russia, diverting exports away from the country and looking to alternative regions for imports – particularly of fuels,” Sirett said.
“The collapse in imports and exports to the country reflects the tangible and effective application of the UK government’s sanctions.”
Jack Sirett
“As the UK and its global partners continue to ratchet up further sanctions to apply economic pressure on Russia and businesses diversify their supply chains, trade with Russia is only likely to see further decreases.”
Trade deficit
Removing the effect of inflation, the total trade deficit, excluding unspecified goods, widened by £4.8bn to £21.4bn in the three months to April 2022
“The overall trade deficit continues to widen driven by the far greater imports of goods, with trade of services comfortably in surplus,” Sirett pointed out.
“The weakening pound could lessen demand for imports which become increasingly expensive, particularly amid the cost-of-living crisis, and raise demand for British goods.”
“Businesses that are able to sell internationally could also benefit from increased demand for their goods and services,” he concluded.