Written by Kunal Sawhney, CEO, Kalkine Group
The international trading environment for the United Kingdom has remained fragile in the last six-month stretch, largely due to the imminent restrictions in the cross-border movement on the back of the coronavirus pandemic and due to unfurling of the new trading agreement between the UK and the European Union after completion of the Brexit transition period.
Adversities with trade
The zero tariff, zero quota trading arrangement finalized between the Downing Street administration and the European Union initially appeared to be immediately beneficial for the exporters based out of the UK. But the volume of exports to the EU felt certain hardships in the first month of 2021, primarily due to the renewed tensions over the mutating strain of coronavirus and the infections related to it.
Moreover, the businesses owners and exporters have had to undergo a series of operations changes in order to continue exporting the goods to various nations under the umbrella of the EU. The third national lockdown in England and subsequent pandemic-induced restrictions in various other parts of Europe contributed substantially in bringing down the cross-border trading activity.
Irrespective of a bunch of headwinds faced by the UK exporters, especially in the first month, the UK exports to the EU registered a marginal uptick in February 2021. According to the data unveiled by the Office for National Statistics (ONS), the quantum of exports to the EU grew by £3.7 billion, or 46.6 per cent to £11.6 billion in February 2021 as compared to the first month of the year.
In January, the UK exports to the EU recognised a record slump with the exports falling by £5.7 billion, 42 per cent on a sequential basis. All these exports exclude the cross-border trade of non-monetary gold and other precious metals.
The country recorded a marginal de-growth in the exports to the non-EU nations, with the exports sliding by £1.5 billion, or 10.5 per cent to £12.7 billion. However, the overall exports from the UK grew by £2.2 billion, or 9.9 per cent, mainly driven by the relatively sharp spike in the exports to EU countries.
As far as the exports to EU nations are concerned, cars, medicinal and pharmaceutical products, chemicals, transport equipment and machinery emerged as the major contributor in fuelling the export volumes. The exports and imports of services remained lacklustre in February as travel, and transport related services continued to be affected by the long-range implications of the Covid-laden restricted environment.
Copyright © 2021 Kalkine Media Pty Ltd.
Better trading prospects
Going forward, the volume of exports will be certainly affected by the nature of restriction in the partner European Union countries. Furthermore, the planned easements within England alongside a series of relaxations in Northern Ireland, Wales and Scotland will play a vital role in supporting the international trading environment.
The proposed removal of limited international movement in stage three of reopening will likely bolster the prospects of services exports as air travel is expected to resume on a larger scale this time. The exporters are now relatively better equipped with the operational framework of the new arrangement between the EU and the UK, which will eventually help in increasing the trading volumes.
The full-scale restart of UK locations near the international border of France will further help in spiraling the export volumes. Nevertheless, the still-evolving nature of the Covid-19 (SARS CoV-2) virus will be keenly eyed by the international trade players as any major disruption caused due to any unforeseen spike in the infections in the UK or in the major trade partners among the European Union can severely affect the commercial activities.