Exports from Germany to the UK fell by almost a third year-on-year in January 2021 as the impact of Brexit began to be felt, a new report has found.
Figures from Germany's Federal Statistics Office (FSO) revealed trade to the UK declined by 30 percent at the start of the year, with the end of the Brexit transition period adding further pressure to markets that have already been dampened by the effects of the Covid-19 pandemic.
New rules put in place from January 1st have added additional costs and complexity to trade between the EU and UK, Reuters noted, which has had a particularly hard impact on small companies. Delays at freight ports are also causing additional problems for exporters.
Gabriel Felbermayr, president of the IfW economic institute in Kiel, told the news provider that while the figures for January are likely to be an outlier as exporters adjust to the new customs environment, trade volumes are unlikely to recover to pre-Brexit levels.
"In the long term, we assume that German exports to the UK will be ten percent below the level expected without Brexit," he said, adding that the post-Brexit agreement means the UK is now "far removed from the rules of the single market".
This will continue to have a negative impact on trade, with many firms on the continent having already reorganized supply chains and scaled back business with Britain, Mr Felbermayr continued.
For 2020 as a whole, the value of exports from Germany to the UK dropped by 15.5 percent compared with the previous year, which the FSO noted was the largest year-on-year decline since the financial crisis of 2009, when a 17 percent drop was recorded.
Meanwhile, imports to Germany from the UK totalled €34.7 billion in 2020, a decline of 9.6 percent compared with 2019. Import volumes in early 2021 are also likely to have been affected by stockpiling as UK firms rushed to complete imports before the end of 2020.