Brexit slows recovery of imports and exports

The recovery of euro area trade has slowed down, partly due to Brexit, the European Central Bank (ECB) said.

First of all, Brexit is the abbreviated way of referring to Britain’s exit from the European Union. On Thursday 23 June 2016 a referendum was held to decide whether the UK should leave or stay in the European Union.

The license was voted by 51.9% against 48.1%.

Consequently, on February 1, 2020, the United Kingdom left the European Union.

Although the agreement between the parties included a transitional period until December 31, 2020, in which the United Kingdom remained in the European market and citizens and companies did not notice differences.

After all this, trade in goods in nominal terms showed a divergence between trade in goods with countries belonging to and not belonging to the euro area at the beginning of 2021, given that the repercussions of the United Kingdom’s exit from the European Union they had a negative impact on trade with countries outside the zone.

Bilateral trade between the euro area and the United Kingdom declined significantly in January, reflecting the reversal of inventory build-up in December and the imposition of additional administrative burdens on exports and imports.

Despite a partial rebound in trade with the UK, exports to non-UK countries continued to be low in February.

Brexit

By contrast, according to the ECB, exports within the euro area experienced robust growth in the first two months of 2021.

The recovery of commercial activity with the main export markets towards pre-pandemic levels continues, while the rest of the world has continued to constitute a drag on total exports.

Similarly, exports from the euro area to China maintained their intense dynamism, driven mainly by exports of automobiles, but also by other categories of goods, while exports to the United States have returned to the pre-pandemic level thanks to exports of automobiles and consumer goods.

More recently, leading indicator data point to the resumption of the dynamics of trade in goods, while the recovery in trade in services continues to stretch over time.

Tourism, the branch of services most affected by the pandemic, shows incipient signs of recovery compared to the lows at the end of 2020.

Although international flights remained scarce in March, early bookings and confidence in accommodation services have started to improve again.