The cost of living crisis is hitting household confidence; UK trade with Germany plummets; FTSE 100 at two-year high – as it happened live | Business
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British businesses missed a rebound in trade with Germany last year as Brexit friction and the pandemic continue to weigh on the economy.
New data from the Federal Statistical Office show that UK imports to Germany fell 8.5% in 2021the first year since the Brexit free trade agreement was reached at the end of December 2020, at 32.1 billion euros.
But other countries have done much better. Germany’s total goods imports jumped 17.1% over the year to €1.202 billion as the easing of lockdown restrictions and the rollout of vaccines boosted the global economic recovery in the year last.
This included a 16.8% increase in imports from Germany’s other European Union members and a 20.8% increase in imports from China last year.
In December alone, German imports from the UK were down 18.2% year-on-year – as there were a stockpile rush in December 2020 as companies braced for possible Brexit disruption.
The EU introduced checks on goods from Britain entering the bloc as soon as the Brexit deal came into force, with experts warning that British businesses were losing their competitiveness.
The UK has delayed its checks on incoming goods until 2022. But even so, German exports to the UK fell by 2.6% in 2021, to 65.4 billion euros. Total German exports rose 14% during the year, even as the pandemic continued to disrupt global supply chains.
Compared to the same month last year, exports to the United Kingdom fell by 7.6% to 5.0 billion euros in December 2021. Imports from the United Kingdom fell by 18, 2% to 2.6 billion euros.
In contrast, Germany’s exports to the United States jumped 18.0% in 2021 as the recovery of the US economy boosted demand for industrial supplies, machinery and consumer goods.
This graphic shows the details:
Destatis also reports that overall German exports rose 0.9% month-on-month in December, with imports up 4.7% from November 2021.
After calendar and seasonal correction, exports increased by 6.8% and imports by 23.5% compared to February 2020, the month before restrictions were imposed due to the Covid-19 pandemic in Germany.
Over the whole of 2021, exports increased by 14.0% and imports by 17.1% compared to the previous year. Exports were 3.6% and imports 8.9% above the level of the pre-Covid 2019 year.
Rather, the data matches the message from a group of MPs this morning that the main impact of Brexit on UK businesses had been “increased costs, red tape and delays at borders”.
There could be worse to come with the introduction of new import controls.
The cross-party Public Accounts Committee (PAC) has reported Brexit bureaucracy has hurt Britain’s trade with the EU. The situation could get worse unless the government works with Brussels to reduce blockages at UK ports
German factories have also been affected by the supply chain crisis. So we hope that the EU’s new multi-billion chip production plan can help them.
The €43 billion program aims to overcome Europe’s dependence on Asian computer chipmakers, as governments and businesses around the world battle shortages that experts say could persist for much of the year.
We will hear from huw pill, the Chief Economist of the Bank of England, later when speaking at the annual conference of the Society of Professional Economists, on the ‘Outlook for UK monetary policy’.
European markets opened higher, with the FTSE 100 close to a two-year high.
Some commodity prices are also under pressure, aluminum at its highest since 2008 Tuesday.
- 9am GMT: Italian industrial production report for December
- Noon GMT: Weekly US Mortgage Applications
- 13:10 GMT: Speech by Huw Pill, Chief Economist of the Bank of England: “Outlook for UK monetary policy”
- 15:30 GMT: Weekly EIA oil inventory figures