EU Referendum


Brexit: you pays yer money …


13/05/2021




ONS trade figures are out for March 2021, which also means that we have the first quarter's figures for the year.

As before, "volatility" is the key word, as trading patterns are distorted by both Brexit and the Covid-19 pandemic – the effects of each so intertwined that there is no reliable means of telling them apart.

As such, there is no particular sense to be made from the monthly figure, any more than there was to be drawn from January or February – although The Times is keen to tell us that UK exports to the EU have almost recovered after plummeting by 40 percent at the start of the year.

Goods exports to the EU fell by £5.6 billion in January, compared with the previous month, but they have climbed steadily since, rising by 8.6 percent to £12.7 billion in March. They are now close to the £13.7 billion recorded in December, "before Britain's departure from the single market caused exports to collapse by 43.2 per cent in January". They rebounded by £3.7 billion in February and rose again by £1 billion in March.

To this paper, the figures suggest that trade has adapted to the new trading rules and is recovering after businesses on both sides of the Channel suffered severe disruption at the start of the year. The Times also thinks that trade patterns might be normalising after businesses brought forward orders in December to beat the Brexit deadline.

It doesn't seem to matter, therefore, how many times the ONS warns – as do others – that comparisons made on the basis of short-term figures are not particularly helpful. We need data from a longer period before conclusions can be drawn about any trends.

Taking the figures over the first quarter is a help, and here the ONS points out that exports of goods fell by £7.6 billion in the period (9.4 percent), when compared with the same period in 2020. The corresponding figure for imports shows a fall of £5.4 billion (5.0 percent).

Comparing the corresponding first quarters of each of the years makes much more sense than a December-January comparison, but even then the ONS remarks that the data for the first quarter of 2020 were strongly impacted by the Covid-19 pandemic. To give a better comparison, therefore, they have also provided comparisons with the first quarter of 2018, "when trade was not impacted by the coronavirus or the end of the transition period".

On the basis of this 2021-2018 comparison , we see that exports overall dropped £11.8 billion (13.9 percent) compared with 2018, while imports took an even greater dive, losing £13.8 billion in value (11.7 percent).

Unfortunately, the ONS does not offer any more detail on comparisons between these periods, and we have to go stumbling around in the archives to find more. But the corresponding data sheet for March 2018 seems to make 12-monthly rather than quarterly comparisons.

No doubt the figures are there to be had, but I find life is too short to expend one's life energy trying to make sense of ONS trade figures. But, in a sense, the message is being conveyed that one does need to look at the corresponding annual figures, rather than "quick and dirty" comparisons over shorter periods.

Unsurprisingly, though, an incontinent legacy media is unable to take the longer view. In this, The Times is not alone, with the This is Money website headlining: "Exports to EU bounce back: Revival in shipments of cars and fish eases fears of a Brexit trade crisis".

This points to the headline statement from the ONS, which states: "Exports and imports of goods with the EU, excluding precious metals, increased by £1.0 billion (8.6%) and £0.8 billion (4.5%) respectively in March 2021; both driven by cars". I was rather taken by the idea that the trade figures were "driven by cars", and wonder whether an unconscious humourist has taken up residence in the hallowed portals of the ONS.

Humour apart, TiM asserts that the ONS report undermines claims that Brexit has caused permanent damage to trade between the UK and EU, something which cannot possibly be supported by the dataset available.

Even if Matt Hughes, a statistician at the ONS, has it that: "There's been a recovery in February and March. Businesses have got used to the border requirements, namely trade documentation and additional paperwork", there are substantial other factors at play, amongst them being delivery periods and costs, and the overall profitability of EU trade. Also, there is the as yet unexplained phenomenon where imports from the EU seem to be more affected than our exports.

This notwithstanding, the narrative is firmly established in the Telegraph which gaily tells us that "Exports to Europe return to pre-Brexit levels", although it does convey the ONS warning that: "It is too early to assess the extent to which this reflects short-term trade disruption or longer-term supply chain adjustments".

The ennobled David Frost also piles in telling the world he is "very encouraged" by the continued growth in the value of goods trade between us and the EU, finding it "striking" that goods exports to the EU now exceed average levels from 2020.

Not for Frost is there any recognition of the ONS caution that figures for 2020 "were strongly impacted by the Covid-19 pandemic". One just hopes that he doesn't believe his own BS, although I rather suspect he does.

The scale of damage to UK trade with the EU inflicted by Brexit has been laid bare in official figures which showed goods exports to the bloc in the first quarter of 2021 down by 18 per cent compared to the last three months of 2020.

Comparing headlines, though, you would wonder whether the Independent is reading from the same hymnsheet, as it headlines: "Trade with EU increases but remains below pre-Brexit levels".

It cites Thomas Sampson of the London School of Economics, who says that the ONS figures suggest that the "incomplete bounceback" seen in February has now stalled, leaving trade flows below the pre-Brexit norm. Sampson is of a view that there is "no certainty that they will eventually reach the levels that would have been expected without EU withdrawal".

Exports to the rest of the world increased by 0.4 per cent over the first quarter, suggesting that the decline in sales to the EU was not due solely to the coronavirus pandemic, he says.

And in a sign of the shift in commercial links away from the UK's former European partners, the paper says, imports of goods from the rest of the world in the first quarter of 2021 were higher than EU imports for the first time since the ONS began collecting data in 1997.

Basically, at this stage of the game, the pundits are able to see what they want to see: you pays yer money and you takes your choice. Predictably, Johnson's official spokesperson is bullish, reflecting the Frost mantra: "The statistics show a welcome increase and continued recovery in the value of trade between the UK and EU in March from February 2021", he says, "with exports almost returning to December 2020 levels and indeed now exceeding the average levels across 2020".

But the "rejoin" driven Lib-Dems have their Treasury spokesperson declare: "There is no way of sugar-coating the clear damage to the economy that these figures demonstrate". This is Christine Jardine, who goes on to say: "The combination of Covid and the difficulty businesses face in dealing with the new EU trade deal have created a perfect storm for the economy".

If you agree, you can always join the "thought-provoking conversations" on the Independent comments, although it's probably best if you don't think at all.

Also published on Turbulent Times.