The UK’s goods exports slumped by £54bn in 2020 as the country lost market share to competitors as Covid-19 hammered global trade, new research shows.
The findings show that the UK suffered a 14.7 per cent fall in goods exports – one of the largest of any major country – and also saw a slower recovery as other nations took market share in key export destinations.
Researchers at Aston University’s Centre for Business Prosperity said "considerable post-Brexit challenges" threatened to derail any recovery from the pandemic.
"It is anticipated that the combination of Covid, Brexit and the UK's long-term productivity challenges will put British businesses in an adverse position for the foreseeable future," the report's authors wrote.
Leading goods exports including cars, oil and gas, machinery and pharmaceuticals all tumbled last year as the pandemic battered economies worldwide and supply chains broke down.
The Centre, which is sponsored by Lloyd’s Banking Group, said the impact would have been even worse without massive inflows and outflows of gold.
Investors typically buy the commodity in turbulent times as it is seen as a safe haven.
The report’s authors, who analysed the latest available UN trade statistics, said the UK would need to make raising productivity its “central goal” to avoid further decline post-Brexit.
Jun Du, professor of economics at Aston Business School, said: “The fundamental causes of the UK’s dismal trade performance go beyond trade itself. Our analysis shows that long-term stagnation in productivity growth is the key reason for the subdued competitiveness of the UK economy.”
The researchers compared the impact of Covid-19 in 2020 with the effects seen during the recession that followed the financial crisis of 2008, finding that while the drop in GDP worldwide had been higher in 2020, trade had not been hit as hard.
This was explained, they said, by the fact that the pandemic and lockdown restrictions had affected different countries at different times, but also by the resilience of so-called “global value chains”, or trade networks.
But turning to the impact on UK goods exports specifically, they found that in nearly every global region, the UK’s top exports suffered sharp declines as coronavirus spread worldwide.
While there was a partial recovery in the third quarter of 2020, the UK was slower than most of its international competitors to take advantage of returning global demand. Over 2020 as a whole, it lost market share in most product categories in the US, Germany and China, the three major markets analysed. Beneficiaries included EU nations such as Spain, Italy and the Netherlands.
The only major exception was gold: the UK exported $3.8bn (£2.8bn) worth of the precious metal in 2020, a 16 per cent increase year-on-year. It also imported $8.8bn (£6.4bn), a 33 per cent rise. This is mainly explained by flows between the UK and Switzerland. Switzerland is a major gold refining and transit centre, while London is a storage and trading hub for international investors.
Some smaller industries also saw a rise in exports last year despite Covid-19, including ship and boat-building.
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