Exports to the bloc have bounced back following a slump in trade when the Brexit transition period ended in December 2019, figures from the Office for National Statistics (ONS) revealed. The ONS said that Britain sold £14.2billion of goods to the bloc in May, a rise of £1.1billion or 8.8 percent since April.
May’s haul was the biggest since October 2019 and follows a sharp fall in trade in January when goods exports to the EU fell to £7.9bn.
Paul Dales, an economist with Capital Economics, told the Daily Mail: “Of course, the pace of the recovery was always going to slow as the economy climbed back towards its pre-crisis level.
“But we hadn’t expected it to slow so much so soon.”
Exports of goods to the rest of the world were also up 5.5 percent to £15.2bn, the highest level since January 2020.
However, imports from the EU to Britain totalled £18.5bn.
This is well below pre-pandemic and pre-Brexit levels and less than the £19.4billion of goods shipped in from the rest of the world.
In a separate report the ONS warned that a global shortage of microchips has hit car production in the UK.
The ONS said output in the “manufacture of transport equipment” tumbled by 16.5 percent in May – the biggest fall since the first lockdown last April.
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The slump came as “microchip shortages disrupted car production”, the report added.
In better news, the “accommodation and food services” sector grew 37.1 percent in May following the reopening of pubs, restaurants and hotels.
Overall, gross domestic product rose by 0.8 percent.
This is far weaker than the 1.5 percent growth expected by economists and means the economy was still 3.1 percent smaller than before Covid struck.
The data emerged as experts said the UK’s economy is set for more volatility for the rest of 2021.
A statement from the Institute of Export and International Trade read: “Volatility in UK trade is expected to continue for the foreseeable future as aspects of the country’s trading relationships with the EU and non-EU markets continue to be negotiated on and are subject to changing regulations.”
Its warning came as it was predicted that a win for England against Italy tomorrow in Euro 2020 would hand the country’s economy a welcome boost.
Simon French, chief economist at brokers Panmure Gordon, said he thinks England’s success will boost economic growth, alongside numerous other factors.
Part of the financial boost would be the impact of spending on hospitality as people with the games, something Mr French estimates could bring £150million to UK GDP.
He added: “If a victory on one day coalesces with a broader feel good factor, like we saw during Euro 96 or the 2012 Olympics, it could boost consumer sentiment.
“The difference this time is that UK households have a lot of pent-up savings due to the pandemic – we estimate about £20billion – and the speed with which they are spent is closely linked to consumer sentiment.
“Winning the final, along with lots other other things like reopening, the easing of restrictions, could help unlock many billions of pounds worth of additional spending.”