This episode looks at the UK's trade data for January, to take a first measure of the impact of the new UK-EU trade barriers which went up in January.
This is hazardous, since the UK's monthly trade numbers are about as unreliable a series as I know of. That's simply because they so often get major revisions on a scale which you just don't see in other countries. You can take two view on this. Either it suggests unique incompetence, or, just as plausibly, a uniquely scrupulous approach to getting it right, even if it takes far longer than can be achieved in the six weeks it takes to produce the first estimate. But the upshot is dramatic: the revisions to monthly exports and imports data can come to literally to tens of billions, so we cannot, we must not, take January's numbers at face value.
And of course, there are other complicating issues just now: the impact of renewed lockdown, the aggravated frictions on the EU borders, and also the probably big inventory swings built up in the months before January's new EU borders kicked in.
Still, exports of goods and services fell 11.2% mom, and fell 26.5% yoy. Goods fell 18.3% mom and services fell 0.9%. And it's all to do with the EU trade: exports to EU fell 40.5% mom, with Eurozone down 38.5% and non-Eurozone down 53.6%. But exports to the rest of the world actually rose 3.6% mom. That's fairly unambiguous: in January 2020 the EU accounted for 44% of UK's goods exports, but this was down to 36% in January 2021.
For all the reasons I've mentioned, its impossible to draw long-term conclusions from today's data. All we can say is that one month on, trade volumes with the EU collapsed in a way they didn't with the rest of the world. Whether this is the start of a longer-term re-structuring of UK trade will only be visible much later in the year.
