After having been boosted by stockbuilding ahead of the end of the Brexit transition period on 31st December, exports and imports were always going to fall in January. But the added drags of COVID-19, the new Brexit customs procedures and the surge in shipping costs appear to have caused a very sharp fall. The drop in the export orders index of the manufacturing PMI points to a 5-10% m/m fall in exports in January. And the number of cargo ships in UK ports in the first 24 days of January was 22% lower than in January 2020. We suspect exports will rebound during the year as those drags fade. But as they are unlikely to rise as rapidly as imports, net trade will be a drag on GDP growth this year.
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