Britain has slipped out of Germany’s top five largest trade partners as imports fall to €32.1 billion in 2021.
The German statistical office, Destatis, said imports of UK goods into Germany fell 8.5 per cent last year in the latest sign that extra costs and red tape related to Brexit are damaging British trading relationships.
Yesterday, parliament’s spending watchdog warned that border checks in place since the beginning of the year had increased business costs and “suppressed” trade with the EU.
The cross-party public accounts committee said there was a risk that the situation would worsen in September, when stricter checks are implemented by the EU and a forecast post-Covid recovery in global trade increases traffic through UK ports.
Damage already done
But according to the latest figures from Europe, the damage could have already been done.
Destatis said UK imports fell in 2021 for the first time since the Brexit free trade deal was agreed in late December 2020.
That is in stark contrast to Germany’s other trading partners, which enjoyed a big rise in sales to the country.
Total goods imports into Germany surged by 17.1 per cent during the year to €1.2 trillion, in part due to the extra costs of imported energy, but also after the easing of lockdown restrictions and as vaccine rollouts spurred the global economic recovery last year.
The increase included a 16.8 per cent rise in imports from Germany’s fellow European Union members, and a 20.8 per cent rise in imports from China.
In December alone, German imports from the UK were down 18.2 per cent year-on-year, which analysts said was due to a rush of stockpiling in December 2020 as firms prepared for possible Brexit disruption.
EU checks
The EU introduced checks on goods from Britain entering the bloc as soon as the Brexit deal came into effect, with experts warning that UK firms were losing their competitiveness.
The value of German goods arriving in Britain has also fallen. The UK delayed its checks on goods coming in until 2022. But even so, German exports to the UK fell by 2.6 per cent during 2021, to €65.4 billion.
Overall, German exports rose by 14 per cent in the year, even as the pandemic continued to cause disruption to global supply chains.
“Structural shift”
Carsten Brzeski, the global head of macroeconomics at ING, said the trade data showed that Brexit had left its mark on German trade.
He told the Guardian: “Looking at export destinations, 2021 clearly marks a structural shift, illustrating current themes including reshoring, slowing of Chinese growth and different ways to deal with the pandemic.
“Brexit has left its mark on German trade as the UK dropped out of the five most important trading partners list, with German companies exporting more to Austria than to the UK.
“In the run-up to the Brexit deal signed in December 2020 many supporters of the vote to quit the EU single market and customs union said the importance of the UK as a trading partner for Berlin would override new trade frictions.”
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