The UK’s trade deficit with the EU hit a record high of £32.9bn in the last quarter of 2023, according to Office for National Statistics (ONS) data released on Friday (13 February).
This is the largest since records began in 1997, fuelled by a jump in imports from the EU.
EU trade
In total, imports from the EU, excluding precious metals, hit £82bn whilst exports to the EU were valued at £49.2bn. This represents an increase of 7.5% in imported goods and a decrease of 6.1% in exports.
The UK’s total imports of goods decreased by £3.5bn (-2.1%) in Q4 2022 compared with Q3. Goods imports from non-EU countries fell in this time period (10.4%).
Exports of goods over the same period decreased by £4.5bn (4.5%), with exports to both the EU and non-EU countries falling.
December’s figures
Goods imports increased by £1.6bn (+2.9%) in the month of December 2022, fuelled partly by an increase in oil prices, while exports fell by £800m (-2.3%).
Imports from the EU were £1.3bn higher than from non-EU countries in December, with exports bound for the EU £1.0bn higher than those going to non-EU countries.
Two years on
The statistics came shortly after the two year anniversary of the UK’s exit from the European trade bloc.
Sophie Hale, principal trade economist at the resolution foundation, commented on the continuing impact of Brexit on UK trade flows:
“Last year, the value of UK trade underperformed key G7 comparators.
“In 2022, UK trade grew by just 19% compared to 2019, whilst Germany, US and Canada all experienced growth of more than 22%. However, by December, UK trade had fallen more in line with comparators.”
Hale also noted by the third quarter of 2022 “the UK experienced the strongest services export recovery in the G7.”
Services
The government pointed to “record highs” being reached for the services industry, stating that UK service exports had hit £397bn for the first time ever.
Business and trade secretary Kemi Badenoch said: “these new figures are a trade success story and cement the UK’s position as a global services superpower.
Post-Brexit summit
Over the weekend, the Observer reported details of a ‘summit’ between senior members of the government and the opposition to discuss how to better handle Brexit.
Figures such as levelling up secretary Michael Gove and shadow foreign secretary David Lammy, as well as non-partisan figures from government and business, met to discuss the shortfalls in the UK’s exit from the EU and how to remedy them.
The BBC also reports that negotiations over the Northern Ireland Protocol are coming to a close, although there is still significant work remaining.