Hopes rise for the rest of the year ...
Economic output fell by 2.9% in January, as lock down returned to the UK. The month on month comparison was better then expected by many. Better than expected according to forecasts from the Bank of England. The Bank had been braced for a 4% setback, in the quarter as a whole.
Construction output increased by almost 1%. Manufacturing output fell by 2.9%. Sectors most badly hit were accommodation and food down by 30% and education down by 16%.
Commenting on the data, the Chancellor Rishi Sunak said "the figures highlight the impact the pandemic continues to have but we have reasons to be hopeful. We have set out a roadmap out of the pandemic, the NHS have vaccinated over 23 million people, and my budget set out our three point plan, to protect the livelihoods of the British people."
The chancellor will hope the January trade figures are just a blip and not the emergent trend. Britain's exports to the EU fell by 40% at the start of the year. The end of the transition period caused huge disruption to trade. Companies grappled with new paperwork and problems of logistics. The UK became an exporter of fresh air, as many import containers were empty, in their return to Europe.
The ONS suggested there were many factors in the disruption to trade, not just the problems at the border. There had been some stockpiling towards the end of last year, compounded by the effect of lock down at the start of this year.
The British Chamber of Commerce were more sanguine. Suren Thiru, head of economics said, "the slump in exports of goods to the EU, provides an ominous indication of the damage being done to trade, as a result of the border disruption."
This week, the EU threatened to impose tariffs as a result of the row over the Northern Ireland protocol. The EU is looking at legal options and legal action. Negotiations are failing. The EU considers Britain to be a partner which cannot be trusted, it is said.
In better new, this week, the OECD released their updated forecasts for the UK economy. Growth of 5.1% is expected this year, followed by 4.7% next. The Bank of England expects growth of 5% this year. The forecasts could well be revised up, as the full picture for the first quarter emerges.
Trade tariffs and problems of logistics, should not be a threat to recovery ...
The Saturday Economist
John Ashcroft publishes the Saturday Economist. Join the mailing list for updates on the UK and World Economy.
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