First half of 2021 figures show that trade in goods and services has slightly shifted away from the EU
Trade in Goods
The share of imports and exports of the UK fell by 2% from the EU in the first half of 2021.
Uk total imports from the Eu increased by +7% YoY, from £94 Bn in H1/2020 to £101 Bn in 2021 H1. Despite this increase , EU’s share in the UK total imports fell.
Exports to the EU increased by +7 YoY, from £63 Bn in H1/2020 TO £68 Bn in 2021 H1. Despite this increase in value terms, the EU’s market share in UK exports fell by 2 percentage points.
The UK lost a quarter of it’s market share in EU imports in the first half of 2021 compared to the first half of 2020 (from 3.6% to 2.6%).
UK’s top Export sectors
The top five export sectors to the EU are Machinery, Chemicals, Vehicle, Minerals and precious stones.
Machinery remains the main exported sector, with £13 Bn of exports in 2021 H1.
Pearls & Diamond Exports
In H1/2021, Pearls & Diamonds joined the list of top 5 sectors of exports, gaining +5% share of UK exports and surpassing exports of base materials.
The export value was £7 Bn in 2021 H1, with an increase in exports mostly going to Hungary & Germany.
Trade in Services
7% of UK imports and 1% of UK exports shifted from the EU to the rest of the world in 2021 Q1.
Imports from the EU fell by 36%, from £14 Bn in 2020 Q1 to £9 Bn in 2021 Q1, a much greater fall than imports from the rest of the world.
Exports to the EU fell by 14%, from £19 Bn in 2020 Q1 to £16 Bn in 2021 Q1, a much greater fall than exports to the rest of the world.
Goods – Based on IEC forecasts, between 2021 to 2025, UK merchandise exports to the EU will contract by 10%, moving from £138 Bn to £120 Bn, whilst UK merchandise imports from the EU will remain stable
Services – Based on IEC forecasts, between 2021 to 2025, UK service exports to the EU will decrease by 3%, moving from £14.8 Bn to £14.3 Bn, whilst UK service imports from EU will decrease by 23%, moving from £13 Bn to £10 Bn.
Post BREXIT trade agreements
Since exiting the EU, the UK rolled out FTAs with 66 markets, lost preferences in 11 markets, gained preferential access to 2 new markets, and lowered preferential access to 27 markets*
Major sector changes in trade in goods and services with new FTA partners
Share of exports of Pearls and diamond increased by 13% to Japan and 13% to Australia in 2021 H1 as compared to 2020.
Share of service exports in the Insurance and Pension sector to Australia increased by 14% in 2021 Q1 as compared to 2020.
Share of service exports in transportation to Australia fell by 20% in the 2021 Q1 as compared to 2020
Share of imports of machinery goods increased by 9% from Japan and 3% from Australia in the 2021 H1 as compared to 2020.
Share of service imports in IP sector from Japan increased by 22% in 2021 Q1 as compared to 2020.
Share of service imports in finance sector from Australia fell by 7% in 2021 Q1 as compared to 2020
Note: Goods: First half year flows; Services: First quarter flows; Observations of shifts should not be attributed to the outcome from signing on FTA, which is too early to see any imapact.
Goods – Based on the forecast results, between 2021 to 2025, merchandise exports to new FTA partners (Japan & Australia) will increase by 5% moving from £10.6 Bn to £11 Bn, whilst merchandise imports from FTAs will increase by 3%, moving from £10.3 Bn to £10.6 Bn.
Services – Based on the forecast results, between 2021 to 2025, exports of services to new FTA partners (Japan & Australia) will increase by 9% moving from £1.11 Bn to £1.21 Bn, whilst imports of services from FTAs will increase by 4% moving from £1.9 Bn to £2.0 Bn.
*: Rolled over, means this is virtuallly no change on what the UK had as a member of the EU’s FTA arrangements. The FTA with the EU is less ambitious than EU membership. New agreements are those which have entered into force since BREXIT.
Source: IEC Calculations and forecasts; ITC; UNSD, ONS