Impacts of EU exit and Covid-19 on UK trade in services

2 August 2021

The Office for National Statistics (ONS) has released its latest analysis of UK trade in services in the context of the ongoing coronavirus pandemic and the end of the EU transition period on 31 December 2020.

Available at www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/articles/theimpactsofeuexitandcoronaviruscovid19onuktradeinservices/july2021, it notes that UK service exports and imports have declined since the first quarter (Q1, January to March) 2019, with trade with EU countries falling more than trade with non-EU countries.

The share of total service imports from EU countries fell by around 9% to 37.9% in the two years to Q1 2021.

The proportion of businesses citing Covid-19 as a challenge increased in mid-2021 compared to the beginning of 2021, while the proportion citing EU exit fell over the same period.

This is also reflected in the results of the ONS International Trade in Services Survey, which suggests coronavirus had a bigger impact on falling trade in services.

The data release shows services trade with the EU fell at a brisker rate than trade with the rest of the world over the two years to the end of March 2021. Services exports to the EU fell by 14.7% in that period and imports by 38.8%.

William Bain, Head of Trade Policy at the British Chambers of Commerce (BCC), said: “Today’s statistics indicate that the effects of the pandemic have masked the real long-term impact of the UK-EU Trade and Cooperation Agreement (TCA) on trade in services, particularly in relation to business travel and supply of services”.

The BCC believes that the latest statistics show that the pandemic is masking Brexit effects.

“The UK Government should seek to be ambitious in a common agenda with the EU on mutual recognition of professional qualifications,” Mr Bain concluded, “building more flexibility around the TCA for business travel, and liberalising reservations on services access to help kickstart our economic recovery from Covid-19”.