Official figures show a sharp drop in trade in goods with the EU as the Brexit transition period ended.
image copyrightGetty Images
UK goods exports to the European Union fell 40.7% in January, according to the Office for National Statistics (ONS), while imports tumbled.
The figures are the first since the introduction of new trading rules between the UK and the EU.
The ONS said the sharp fall in trade was “likely the result of temporary factors”.
Meanwhile, new data showed the UK economy shrank by 2.9% in January as the third lockdown came into force.
The economy is 9% smaller than it was before the start of the coronavirus pandemic.
The ONS said January’s fall was a “notable hit”, albeit smaller than some had expected.
Retailers, restaurants and hairdressers were all affected by the latest Covid-19 lockdown.
“Manufacturing also saw its first decline since April with car manufacturing falling significantly,” said Jonathan Athow from the ONS.”However, increases in health services from both vaccine rollout and increased testing partially offset the declines in other industries.”
Economic activity in health increased by 8.7%, mainly through Covid testing and vaccine schemes.
Mr Athow also pointed to the fall in both imports and exports to the EU, which fell “markedly” in January. Data showed that imports of EU goods into the UK dropped by 28.8%.
However, the ONS said that other data suggested that trade levels began to recover towards the end of the month.
It said companies had been stockpiling ahead of the end of the transition period, and may have been using their stock instead of buying new goods in January.
The end of the Brexit transition period came as a new strain of Covid-19 emerged in the UK, requiring lorry drivers to take tests to cross the border at the English Channel.
Exports of goods from the UK into the EU fell by £5.3bn in January 2021, while imports fell by £8.9bn.
Falls in goods coming into the country were largely seen in machinery and transport equipment, and chemicals from the EU, in particular car imports, as well as medicinal and pharmaceutical products.
But the ONS said firms were reporting that trade was getting easier.
It said the number of businesses saying they were unable to export between the middle and the final week of January had fallen by 5.4% and those saying they could not import had dropped by 3%.