Germany-UK trade drops sharply

The effect of Brexit on British manufacturing is highlighted in new data that shows trade between the United Kingdom and Germany has slumped since 2016.

Trade between the UK and the European Union's biggest economy is far behind overall import and export levels in both countries, according to figures released on Wednesday by Destatis, the German office for national statistics.

It said exports from Germany to the UK dropped 3.9 percent in March compared with the previous month, and fell 0.3 percent from the same month last year. Exports to Britain were down 27 percent compared with March 2019, despite Germany's overall exports increasing by 16 percent.

The Financial Times said that the UK is "the only major German trading partner to record a contraction in exports compared with March 2016, three months before the Brexit referendum".

The Destatis data shows the UK manufacturing economy is decoupling from the EU single market, said Ulrich Hoppe, director-general of the German-British Chamber of Industry and Commerce.

Hoppe told the FT that from a German perspective, "the UK is to some extent being taken out of EU supply chains. .. because it has become more complex and expensive (to trade with UK) and that has an effect on bilateral trade".

Brexit-related logistical issues are the main concern for German companies based in the UK, Hoppe added.

The British Chambers of Commerce said German-UK trade is not recovering in the way it is for other countries.

Quoted by the FT, William Bain, head of trade policy at the British Chambers of Commerce, said: "As costs of exporting from Germany to the UK, and vice versa, have gone up since the (EU-UK) Trade and Cooperation Agreement came into effect there has been a clear drop in bilateral trade volumes, particularly among smaller businesses."

Research published last month by the London School of Economics' Center for Economic Performance claimed new post-Brexit trading rules introduced last year caused a "major shock" to UK-EU trade, noted the BBC.

The study found new rules had caused many UK companies to pause exports to the trade bloc.

Authors of the research said that UK imports from the EU fell by 25 percent compared to those from elsewhere in 2021.

The report said European businesses may have been hit by "red tape, customs controls and taxes". Full UKEU border checks have not yet been implemented and there are suggestions they may be delayed further.

The study assessed a range of 1,200 different products and found a "sharp drop" in the number of trade relationships between UK exporters and EU importers.

Data from the Office for National Statistics showed there has been significant supply chain disruption for cars and other road vehicles, along with aircraft components.