The lead in Sunday’s Observer (7th February) was ‘Fury at Gove as exports to EU slashed by 68% since Brexit’. If this headline is right, this is indeed a ‘Brexit disaster’. Fortunately, some basic due diligence suggests that it’s over the top.
The Observer claims that ‘the volume of exports going through British ports to the EU fell by a staggering 68% last month compared with January last year, mostly as a result of problems caused by Brexit’. This would indeed be ‘staggering’ – and it is almost certainly wrong.
The source for this figure is a letter that the Road Haulage Association (RHA) wrote to Michael Gove on 1st February (as part of its lobbying for more support for the industry). This letter simply said that ‘intelligence we are collecting on an ongoing basis from international hauliers suggests that loads to the EU have reduced by as much as 68%’.
Straightaway that raises some important questions. In particular, is ‘as much as 68%’ really ‘68%’ across the board? Is this an average over the whole month of January (as the Observer implied), or simply a snapshot (perhaps the low point) during the month? And is this a proper scientific survey, or just a sample of self-selecting reports from a small number of RHA members (it now appears to be the latter)?
I suspect that the figures reported earlier by Sky News (on 22nd January) are far closer to the mark. According to the independent logistics data company Sixfold, daily truck volumes between Britain and EU countries fell by 61% in the first few days of January (similar to the RHA figure). But they then partially recovered, leaving traffic down 29% in the first 20 days of the month compared to a year earlier (a figure which is, frankly, a lot more plausible).
What’s more, these measures are only proxies for total goods exports. The RHA is the trade association for road hauliers and 85% of goods transported within the UK are moved by road. Nonetheless, a large proportion of cross-border trade is unaccompanied freight, rather than carried on the back of a lorry, and a not insignificant amount is carried by air. The RHA figures may therefore not be representative of overall trade. We should really wait for comprehensive data from official sources.
But even taking the RHA numbers at face value, the Observer’s spin is misleading – for three more reasons.
First, since the data are comparing January 2021 to January 2020, a significant part of any slump will be due to the fallout from Covid and the renewed lockdowns in both the UK and the EU. (ONS data show that the value of exports from the UK to the EU fell nearly 30% between January and April last year.)
Second, as noted in the manufacturing PMI surveys, some orders from EU clients were brought forward to late 2020 to avoid potential Brexit disruption. This earlier stockpiling is depressing exports at the start of 2021, but this drag at least should only be temporary.
Third, other (high-frequency) data suggest that traffic did fall sharply in late December and early January, but then began to recover over the rest of the month. That’s also consistent with hopes that some of the disruption is already easing as firms become more familiar with the new rules and paperwork. The RHA figure (whatever it may be) is therefore almost certainly out of date, and the data for February should be a lot better.
To be fair, UK-EU trade has indeed been severely disrupted over the last few weeks. The Observer is also right to reflect the concerns of the haulage industry about what might happen after the end of the current transitional arrangements. Nonetheless, it is unlikely that UK exports to the EU fell by as much as 68% last month. An even if they did, this figure would be of little value as a guide to the longer-term impact of Brexit.
First published on 7th February 2021