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UK exporters struggle with Brexit despite global trade boom

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UK exporters struggle with Brexit despite global trade boom
The Brexit factor weighed on numbers, as new border checks, supply chain issues such as queues at ports and a shortage of HGV drivers continued. Photo: Hannah McKay/Reuters

The trade UK deficit widened to £2.8bn ($3.7bn) in September, from a revised £1.9bn in August, according to ONS figures released on Thursday, as exporters struggled to capitalise on a global bump in demand. 

The Brexit factor weighed on numbers, as new border checks, supply chain issues such as queues at ports and a shortage of HGV drivers continued.  

The value of goods exports edged up to £26.4bn in September, from £26bn in August, but that still was well below 2019’s average of £31bn.

Exports were also weak in real terms — the volume of goods exports was 16% below its 2019 average.

"Brexit is to blame for the ongoing relative weakness of goods exports. After all, the commodities breakdown shows that food and beverages exports once again were among the worst performing sectors," said Gabriella Dickens, senior UK economist at Pantheon Macroeconomics.

Overall, imports of goods to the UK increased by £2.3bn (5.9%) in September 2021, driven by increasing imports from non-EU countries. 

Total exports of goods also increased in September 2021, because of an increase in exports to the EU, while exports to non-EU countries fell. 

Read more: Inflation and supply chain crunch plague UK builders in third quarter

Exports to EU countries were £800m higher than exports to non-EU countries in September 2021. Imports from non-EU countries continue to be higher than from EU countries for the ninth consecutive month. 

After the gap between the two closed across the summer months, it has now increased to its widest point of the year, at £2.5bn. 

The ONS said that, with the ongoing coronavirus pandemic and recession, it is difficult to assess the extent to which this reflects short-term trade disruption or longer-term supply chain adjustments.

"Looking ahead, we do not expect to see a sharp revival in exports in the coming months," said Dickens. 

"The new export orders component of the manufacturing PMI was below 50 in October and below the equivalent index in the Eurozone for the tenth consecutive month. 

"In addition, temporary trade barriers might be imposed by the EU in the coming months if the dispute over the Northern Ireland protocol escalates."

Fuel imports propped up the UK's trade numbers in the run-up to winter.

Read more: UK economy grows in September but recovery slows

According to the data, the large increase in fuel imports was driven by a rise in imports of crude oil and gas from Norway, and crude oil from the USA, following on from a fall in August 2021.

The rise in fuel prices reflects increased global demand driven by the economic recovery from the COVID-19 pandemic and global recession, alongside international supply issues, the ONS said.

Increased volume of imports reflects higher domestic demand compared with a year earlier, combined with domestic supply disruptions and a lower production of renewable energy than in 2020.

Watch: What is inflation and why is it important?

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