No Deal Brexit Impact on UK Import Export – Understand UK Trade Data

30 December 2020
UK Trade Data

Britain and the European Union are seeking a post-Brexit trade deal, with failure likely to impact UK’s imports & exports. This would also result to increased chaos in mutual trade between UK and European Union countries, financial markets tumbling and huge economic costs. Brexit withdrawal agreement was officially signed on 24th January 2020. A no-deal Brexit is the potential withdrawal of the UK from the EU without a withdrawal agreement. Let’s discuss more about no deal Brexit and its impact on UK import & export from Export Genius UK trade data and business intelligence reports.


What is a No-Deal Brexit?


With the Dec 31, 2020, deadline for a trade agreement between the European Union and the United Kingdom approaching, the risk of a “no-deal Brexit is mounting. When the U.K. initiated Brexit its exit from the EU on 31st Jan 2020, the Withdrawal Agreement provided 11 months for negotiating a new trade relationship between U.K. and EU during the transition. If no deal is reached by the deadline, it will trigger what called a no-deal Brexit. That means the UK-EU trade relationship will be governed, by default, by the trading rules of the World Trade Organization (WTO).


How it will impact on UK economy?


Industries such as manufacturing, financial services and agriculture would be hammered by no deal, which would wipe 2% off the UK’s economic output on top of the hit caused by Covid-19 pandemic. According to intelligence reports, the consequences of no deal are severe and the spread of the novel coronavirus has only increased the importance of agreeing a deal.


How will this affect specific sectors?


The effect of a no-deal Brexit and its new regulatory hurdles won’t be evenly distributed. They would hit some sectors much harder than others. The new trade barriers are particularly concerning to the agricultural sector, automobile industry and manufacturing sector.


While the EU’s average MFN tariff rate on commodities is 3.2%, tariffs on some U.K. goods would be significantly higher. EU tariffs on imports on an average would be 11.1% on agricultural commodities. According to market research data, EU tariffs can reach 189% on some dairy products and 116% on animal products.


UK Imports (Jan-Oct 2020)


Based on UK import data and shipping details, the value of UK’s imports started falling drastically from March to May 2020, when novel coronavirus spread rapidly and country went into lockdown. June month saw some recovery after some relaxation and opening of industries. From July to October 2020, import value of total commodities increased as the United Kingdom imported goods from other countries. Below given chart shows dollar amount of UK’s imports recorded from Jan to Oct 2020. 


Month

Value USD Million

January

54,123

February

50,301

March

50,824

April

36,359

May

35,794

June

47,756

July

51,312

August

52,775

September

64,031

October

63,564

 


UK Exports (Jan-Oct 2020)


Our UK export data shows that from Feb to Jun 2020, the value of total goods exported fell drastically amid Covid-19 pandemic and lockdown. The United Kingdom recorded an increase in export value from Jul to Oct 2020, when the country started recovering from the virus and economy. See chart below to analyze actual picture of UK exports from Jan to Oct 2020.


Month

Value USD Million

January

36,953

February

35,101

March

34,992

April

29,232

May

26,602

June

29,740

July

31,855

August

30,104

September

32,828

October

36,806

 


To some extent, financial markets have already priced in a no-deal Brexit. If a deal is struck, stocks may rise. However, the short-term effects of a no deal Brexit may be hard to analyze because of the significant negative impact of the Covid-19 pandemic.

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