Goods sales to the EU plunged by 40.7 per cent in January – and imports slumped by 28.8 per cent – the largest declines since comparable records began in 1997.
But David Frost, picked by Boris Johnson to negotiate the Christmas Eve agreement, pointed to pre-Christmas “stockpiling” and “Covid lockdowns across Europe” as explanations for the slump.
“These effects are starting to unwind,” he argued, adding: “Freight volumes between the UK and the EU have been back to their normal levels for over a month now, i.e. since the start of February.”
Lord Frost, now the Brexit minister, also said: “Many businesses have made the changes needed to trade effectively with the EU, but we are focused on providing active and extensive support to others who need to adapt.”
But David Henig, director of the European Centre for International Political Economy, said such denial flew in the face of “pretty much every reputable trade specialist and 100 years of trade theory”.
Sam Lowe, senior research fellow at The Centre for European Reform think-tank, said: “I mean, it’s not particularly difficult to understand.
“If you put up large barriers to international trade, the expected result is trading becomes more expensive and difficult, and therefore there is less trade than if the barriers were not there.”
And Anton Spisak, a former Foreign Office policy adviser – pointing to an 83 per cent plunge in fish exports to the EU – taunted Lord Frost, saying “Somewhat difficult to stockpile fish, I think.”
Suren Thiru, head of economics at the British Chambers of Commerce, said the figures were “an ominous indication of the damage being done to post-Brexit trade with the EU”.
“The practical difficulties faced by businesses on the ground go well beyond just teething problems and, with disruption to UK-EU trade flows persisting, trade is likely to be a drag on UK economic growth in the first quarter of 2021.”
That view echoes the Office for Budget Responsibility, the Treasury watchdog, which forecast a £2.5bn hit to the UK economy – 0.5 per cent of GDP – in just three months.
But Lord Frost called for “caution when interpreting these statistics”, insisting: “This month’s unique combination of factors made it inevitable that we would see some unusual figures this January.”
Mr Henig warned the economic damage would continue, saying: “It will take some time for all of the goods and services trade effects of Brexit to become clear.
“But there is currently little reason to think that forecasts of the order of a 5 per cent hit to GDP over a few years are likely to be wrong.”
