This article was originally published on Julian Jessop’s personal blog and is reproduced with the author’s kind permission.
The lead in Sunday’s Observer newspaper (7th February) was ‘Fury at Gove as exports to EU slashed by 68% since Brexit’. If this headline is even approximately right, this is indeed a ‘Brexit disaster’. Fortunately, some basic due diligence suggests that it’s completely over the top.
The Observer claims that ‘the volume of exports going through British ports to the EU fell by a staggering 68% last month compared with January last year, mostly as a result of problems caused by Brexit’. This would indeed be ‘staggering’ – and is almost certainly wrong.
The source for this figure appears to be a letter that the Road Haulage Association (RHA) wrote to Michael Gove on 1st February (as part of its lobbying for more support for the industry). This letter simply said that ‘intelligence we are collecting on an ongoing basis from international hauliers suggests that loads to the EU have reduced by as much as 68%’.
Straightaway that raises some important questions. In particular, is ‘as much as 68%’ actually ‘68%’ across the board? And is this an average over the whole month of January (as the Observer implied), or simply the low point during the month?
I suspect that the figures reported earlier by Sky News (on 22nd January) are far closer to the mark. According to the independent logistics data company Sixfold, daily truck volumes between Britain and EU countries fell by 61% in the first few days of January (similar to the RHA figure). But they then partially recovered, leaving traffic down 29% in the first 20 days of the month compared to a year earlier (a figure which is, frankly, a lot more plausible).
What’s more, these measures are only proxies for total goods exports. The RHA is the trade association for road hauliers and 85% of goods transported within the UK are moved by road. Nonetheless, a large proportion of cross-border trade is unaccompanied freight, rather than carried on the back of a lorry, and a not insignificant amount is carried by air. The RHA figures, which seem to be based on a rather unscientific survey, may therefore not be representative of overall trade. We should really wait for comprehensive data from official sources.
But even taking the RHA numbers at face value, the Observer’s spin is misleading for three more reasons.
First, since the data are comparing January 2021 to January 2020, a significant part of any slump will be due to the fallout from Covid and the renewed lockdowns in both the UK and the EU. (ONS data show that the value of exports from the UK to the EU fell nearly 30% between January and April last year.)
Second, as noted in the manufacturing PMI surveys, some orders from EU clients were brought forward to late 2020 to avoid potential Brexit disruption. This earlier stockpiling is depressing exports at the start of 2021, but this drag at least should only be temporary. Ideally, we need comparable data for November and December too.
Third, other data (such as shipping visits) suggest that traffic slumped in late December and early January, but then began to recover over the rest of the month. That’s also consistent with hopes that some of the disruption is already easing as firms become more familiar with the new rules and paperwork. The RHA figure (whatever it may be) is therefore almost certainly out of date, and the data for February should be a lot better.
To be fair, UK-EU trade has indeed been severely disrupted over the last few weeks. The Observer is also right to reflect the concerns of the haulage industry about what might happen after the end of the current transitional arrangements. Nonetheless, it is unlikely that UK exports to the EU fell by as anywhere near as much as 68% last month, or that this figure is a useful guide to the longer-term impact of Brexit.
For those interested, the Cabinet Office has published a comprehensive rebuttal of the Road Hauliers’ Association’s claims. As we suggested, the RHA figures both for exports and for the number of empty outbound lorries have little relation to reality. We note however that the government’s estimate of pre-Jan 2021 figure for the % of empty outbound lorries is lower than the figure we cited from an article from 2018: