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Lloyds Banking Group Centre for Business Prosperity COVID-19 and UK Trade By Jun Du and Oleksandr Shepotylo Insight Paper March 2021
COVID-19 and UK Trade
By Jun Du1,* and Oleksandr Shepotylo1
March 2021
1
Economics, Finance and Entrepreneurship Department, Aston Business School,
Aston University.
*Correspondence author: Professor Jun Du, Email: j.du@aston.ac.uk, Telephone:
07713085539; Twitter: @jundu1mecom.
Acknowledgement: Xiaocan Yuan and Dr Michail Karoglou’s excellent research
support for collecting and managing the Chinese Custom data is much appreciated.
We wish to thank Professor George Feiger for his valuable comments on the earlier
draft. We are thankful for the financial support of Lloyds Banking Group. The views
expressed in this paper are those of the authors alone.
2
EXECUTIVE SUMMARY 4
1. Introduction 7
2. The great trade collapse in 2020 9
3. How did UK trade perform through the COVID-19 crisis? 13
3.1 Aggregate trends 13
3.2 Product trends 14
3.3 Regional trends 18
3.4 Market level analysis of UK performance 22
3.4.1 United States 22
3.4.2 Germany 28
3.4.3 China 34
4. A path to productive recovery 41
5. Concluding remarks 45
3Executive Summary
This paper documents the unprecedented disruptions which affected UK trade in goods during
the COVID-19 pandemic in 2020. Economy-wide, the pandemic has caused a significant
decline. Overall UK goods exports contracted by almost 15% in 2020, a reduction of $68.7 bln
USD (£54.5 bln GBP based on the average exchange rate for 2020), while the country’s annual
GDP contracted by just under 10%. An international comparison depicts similar sharp declines
among the UK’s peers, but the statistics suggest that UK had a deeper decline and slower
recovery, compared with Germany, Italy, Spain and the US.
The UK’s top five most exported products, which together account for 47% of all goods
exports, suffered a substantial decline in year-on-year (YoY) monthly terms between January
and September 2020. Mineral fuels and cars declined the most, with YoY monthly reductions
in exports of 36.7% and 36.5% respectively. Machinery and mechanical appliances
experienced a YoY monthly fall of nearly 20%, followed by a slightly smaller decline in
electronical machinery products. Exports of pharmaceutical products also declined by 10%.
Goods exports represented 53.7% of the total value of UK exports in 2019, the last full
year for which both goods and services export data are available. As such, despite accounting
for less than 10% of UK GDP, manufactured goods are still a hugely important component of
UK trade with the rest of the world.
US imports Germany’s imports
China’s imports
4In 2020, the UK’s goods exports fell short of the previous years’ levels in most regions,
including in the EU and North America, seeing falls in exports of 18.8% and 16% respectively.
In some key export destinations – Germany, the US and China - the UK seems to have suffered
a sharper decline, experienced slower recovery, and might have failed to grasp emerging
market opportunities, shown in the figure below.
Extending our analysis to the three years prior to 2020, we find that the weakening of
the UK’s global competitiveness may be a more longstanding development, for its slow growth
in the main products and key markets are widely recognisable relative to its competitors. This
suggests that it may be too optimistic to expect that a fast and full recovery is in sight.
We argue that the fundamental causes of the UK’s dismal trade performance in the
recent past go beyond trade itself. The long-term stagnation in productivity growth is the key
reason for the subdued competitiveness of the UK economy. Notwithstanding the country’s
world-leading scientific institutions, this has resulted in a lack of competitiveness in producing
new goods and services in this country and, by extension, an inability to be more resilient to
changes and to exploit opportunities in a crisis like COVID.
As the UK (at the time of writing) successfully rolls out the vaccination programme, its
economy may bounce back faster than others. However, considerable post-Brexit challenges
lie ahead for UK businesses, threatening the chances of a full and fast recovery from the
pandemic and putting even more pressure on the UK’s trailing position in productivity terms.
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.
To recover from the COVID crisis (and new trade barriers resulting from Brexit), the
UK needs to make boosting productivity its central goal. In particular, the UK needs to seize
the opportunities to restructure and reinvent its economy to further consolidate its strengths in
knowledge-intensive and high-skill products and services. To regain ground in the uncertain
post-COVID world economy, it needs to punch above its weight in new industrial and
technological fields, as well as in new markets – some of which may have become more
apparent either because of paradigm shifts precipitated by COVID or from having definitively
left the EU’s structures and regulatory framework. There lies a virtuous circle between
innovation, productivity and exporting, which deserves policymakers’ focused efforts in
building and maintaining.
To do so, productivity must be placed at the centre of policymaking. Industrial policy,
innovation policy, skills policy and trade (and investment) policy should be made coherently
and facilitate this goal. Innovation has been crucial for the UK’s trade success with the EU and
5elsewhere. For this to continue, it is paramount to design polices and allocate public R&D
resources to strengthen industrial sectors and technological fields that will create the products
and services of future export growth.
When updating industrial and innovation policies, policymakers and industrial leaders
should use signals coming from international trade as an ‘anemometer’ for detecting global
technological, socioeconomic and geopolitical changes. This involves re-assessing UK firms’
internationalisation options and strategies, and re-evaluating UK industries’ value propositions.
Furthermore, targeted efforts are required to revive business dynamism through
entrepreneurship and innovation ecosystems, especially in the places and sectors expected to
suffer most from the pandemic. It is essential to support the smallest and earliest
entrepreneurial efforts (entrants), as well as post-entry entrepreneurs and incumbents, to
nurture a pipeline of future business leaders.
Last but not least, we must move the objective of spreading the benefits from trade and
investment to a wider and more inclusive group of industries and businesses up the policy
agenda.
While Government can create a conducive framework, business leaders themselves can
take a number of actions too. It is important for any business looking to engage in international
trade to develop an acute sense of the changing dynamics behind global technological,
socioeconomic and institutional changes, and use them to mitigate pitfalls and identify new
opportunities, enabling better decision-making. Productivity improvement ought to be a key
objective of any strategy and businesses need to map out their own key enablers, be that
upgrading technology, labour and skills, investment in product and process innovation, or
upscaling at home and abroad. Finally, businesses can seize new opportunities created by the
COVID crisis and Brexit to recover, invest, grow and lead; to be at the leading edge
technologically, greener, more agile and resilient. The smartest firms can use the ‘quantum
leap’ in digitalization and new ways of working engendered by the COVID experience as a
powerful engine, enabling them to become forward-looking when it comes to the future
technologies, skills requisites, management capability and training needs that trading success
depends on.
61. Introduction
The COVID-19 pandemic has caused unprecedented disruptions to the world economy. The
challenges it brought and the changes it accelerated have upended the existing international
economic order. The UK in some ways appears to be losing out more than most in this situation.
Its GDP has declined by 9.9% in 2020, the worst reduction since 1955, i performing
considerably worse than other advanced OECD economies. ii Afflicted by supply chain
breakdowns and weakened demand, the UK’s international trade has suffered a huge decline.
Overall goods exports contracted by 14.7% in 2020 (from $468.3 bln USD in 2019 to $399.6
bln USD in 2020), likely the worst result among the G7.iii
The COVID crisis happened following several years of Brexit uncertainty that have
already led to trade destruction and diversion.iv In particular, the post-Brexit obstacles of red
tape and other non-tariff barriers have put some businesses in a more disadvantageous position
in a fast-changing marketplace with fierce competition.
The future is still uncertain. On the one hand, the rapid rollout of the UK’s vaccination
programme by international standards could help the economy bounce back faster than others.
A thaw in demand-side consumer spending and revived business dynamism could shorten
disruptions and reverse the downward growth trajectory. In such circumstances, COVID could
mark a negative but only transient impact on the economy and its ability to trade with others.
On the other hand, it is likely that the UK’s decline in international trade has deeper causes.
The long-term stagnation in productivity growth may be the key reason for the reduced
competitive advantages of the UK economy. After all, productivity underpins the
competitiveness of UK businesses – selling goods, services or both – in this country and
elsewhere, and by extension their ability to adapt to accelerated changes and to exploit new
opportunities created by a crisis like COVID.
We believe in a fact-based approach to inform policy and practices. Our aim is to
provide the evidence necessary for decision-makers to respond to this unique situation by
adapting, investing, upgrading, and re-strategizing to mitigate pitfalls and seize new
opportunities. To this end, we build on the recent comprehensive review, ‘UK Trade and
Prosperity 2020’,v and conduct further detailed analysis on UK trade during the crisis period.
We first compare the trade collapse in 2020 with the last major downturn in 2009 following
the Great Recession. The distinct causes, triggers and sequences of shocks which occurred led
to different levels of impact. Then, we document the performance of the UK’s trade in goods
7in the first three quarters of 2020 using detailed statistics on trade flows. To give context for
the 2020 trade performance, we also incorporate analysis on the preceding years 2017-2019.
Combining evidence from the aggregate level, regional level, product level and in key
markets, we conclude that, in 2020, UK trade not only suffered significant decline, but also
recovered less swiftly compared to its main competitors. The UK’s top five most exported
products, together accounting for 47% of all exports, experienced sizeable year-on-year (YOY)
monthly declines between January and September 2020. Mineral fuels and cars declined the
most, with YOY monthly reductions in exports of 36.7% and 36.5% respectively. Machinery
and mechanical appliances experienced monthly falls of nearly 20%, followed by a slightly
smaller decline in electronic machinery products. Exports of pharmaceutical products also
declined by 10%. Some of these flagship products may continue to suffer from a longer-term
decline beyond 2020.
The UK’s exports fell short of the previous years’ levels in most regions, including in
the EU and North America, seeing falls in exports of 18.8% and 16% respectively. In some
key export destinations – Germany, the US and China - the UK seems to have suffered a sharper
decline, experienced slower recovery, and might have failed to grasp emerging market
opportunities.
It is also true that new opportunities were grasped in unexpected sectors and markets.
Examples include ship and boat builders and vegetable growers. However, while these sectors
impressively increased their overseas sales, this is nowhere near enough to compensate for
declines in the major industrial sectors.
Clearly, some ground has been lost and the status quo ante has changed dramatically
in a short space of time. The key question is, what changes are necessary for businesses and
policymakers to respond more positively and effectively to the challenges presented?
To answer this question, we analyse the possible causes behind the observed decline in
light of the recent trends of the globalisation. We argue that the slowdown and restructuring in
global value chains (GVCs) did not happen solely because of the COVID pandemic. The virus
was merely a catalyst for faster changes, in which weakness became more visible. In this case,
what may be the root and long-term cause of the decline in exports may be UK’s stagnated
productivity growth and lack of innovation. We discuss in detail why it is essential for the UK
to make boosting productivity its central goal to recover from the COVID crisis (and new trade
barriers resulting from Brexit), and why COVID presents a great opportunity to strengthen the
virtuous circle between innovation, productivity and exporting. Specific policy
recommendations are provided.
8Our analysis draws on the United Nations International Trade Statistics Database
(COMTRADE), the largest repository of international trade data, complemented by the
Chinese Customs Trade Statistics Database. It covers consistently-coded and quality-checked
trade flows between 170 reporting countries on a monthly basis. Based on the most recent
available monthly trade transactions between the UK and its trading partners up to
September/October 2020, we make pioneering efforts to provide a comprehensive and in-depth
analysis of the international trade dynamics of UK businesses.
The rest of the paper has the following structure: Section 2 makes a comparison of the
2020 trade collapse with that of 2009; Section 3 gives a detailed account of how the UK
performed in relation to trade in goods in the first three quarters of 2020; Section 4 discusses
these findings and reflects on the priorities going forward. It also draws concluding remarks.
2. The great trade collapse in 2020
When the COVID-19 pandemic struck in 2020, the world economy was a deeply intertwined,
complex network of production and trade. It meant that, from the very beginning, COVID-19
and globalisation have been tightly linked. Goods, capital and people crossing borders allowed
the virus to travel far and wide at rapid speed. To understand the resulting impact on trade, we
draw comparisons between the 2020 trade collapse triggered by the COVID-19 pandemic crisis
with the last global trade collapse in 2009, following the 2008 Great Recession. Both crises
precipitated sharp and severe falls in exports across the world along with even sharper declines
in GDP, illustrated in Figure 1. What differs in these two crises is the relative declines in trade
to those of GDP. The 2009 trade collapse was much more severe relative to the contraction of
the economy, while this time (in 2020) the economy contracted much more but the trade
collapse was significantly milder.
9GDP
Figure 1: GDP andand Export
export Contraction
contraction in crisis ofin2009
Crisis
and 2020
2009 2020,Q1-3
10 10
0 0
Growth rate, %
Growth rate, %
-10 -10
-20 -20
-30 -30
All
Canada
China
EU
Germany
India
Italy
Japan
Mexico
South Africa
UK
US
All
Canada
China
EU
Germany
India
Italy
Japan
Mexico
South Africa
UK
US
GDP Export
Source: WDI, OECD, COMTRADE.
Note: GDP growth for 2009 is from WDI; GDP growth for 2020 is based on OECD Q1- Q3 data, while Q4 data are
not yet available. The 2009 export growth is computed based on COMTRADE data, except for OECD and EU export,
which are computed based on WDI data on export of goods. All in current USD. The 2020 export growth is based
on 9 months of export data from COMTRADE for Canada, UK, US, South Africa, 8 months of data for Germany,
India, Italy, and EU, and 7 months of data for Japan and Mexico. Data for China is based on China Customs Data.
To elaborate on this using a metric to measure the scale of trade disruption, we compare
the contraction of export growth in relation to that of GDP growth, to give a ‘shock factor’. As
is evident in Table 1, the shock factor for all countries studied was only one-seventh in 2020
compared to 2009. Clearly, the trade collapse in 2009 was much more catastrophic, while the
2020 collapse was less pronounced. Furthermore, trade shocks were more evenly distributed
across countries this time, compared to 2009 when some countries experienced much more
severe shocks than others. In particular, the export contraction among EU countries was five
times the GDP contraction in 2009, but only twice as large in 2020.
Table 1: GDP and Export contraction in Crisis of 2009 and 2020
2009 Trade collapse 2020 Trade collapse, Q1-3 2020 Trade collapse
Country GDP Export Shock factor GDP Export Shock factor GDP Export Shock
growth growth (Export growth/ growth growth (Export growth growth factor
GDP growth) growth/ GDP (Export
growth) growth/
GDP
growth)
All -1.6 -21.5 13.8 -6.9 -14.6 2.1 .. .. ..
Canada -2.9 -30.8 10.5 -6.0 -15.6 2.6 -5.36 .. ..
China 9.4 -16.0 -1.7 0.4 -0.8 -1.9 2.3 .. ..
10EU -4.3 -22.8 5.3 -6.9 -14.1 2.0 .. -16.3 ..
Germany -5.7 -22.8 4.0 -5.8 -13.4 2.3 -4.9 -7.39 1.51
India 7.9 -2.8 -0.4 -9.2 -21.0 2.3 .. .. ..
Italy -5.3 -25.0 4.7 -9.5 -14.0 1.5 .. .. ..
Japan -5.4 -25.7 4.7 -6.0 -19.8 3.3 -4.79 -9.19 1.92
Mexico -5.3 -21.1 4.0 -9.8 -18.0 1.8 .. .. ..
South -1.5 -27.2 17.7 -7.9 -10.7 1.4 .. -4.66 ..
Africa
UK -4.2 -25.4 6.0 -11.0 -17.0 1.5 -9.92 -14.67 1.48
US -2.5 -18.7 7.4 -3.9 -15.5 4.0 -3.5 -13.02 3.72
Source: WDI, OECD, COMTRADE. Note: GDP growth for 2009 is from WDI; GDP growth for 2020 is based on OECD
Q1- Q3 data. The 2009 export growth is computed based on COMTRADE data, except for OECD and EU export, which are
computed based on WDI data on export of goods. All in current USD. The 2020 export growth is based on 9 months of
export data from COMTRADE for Canada, UK, US, South Africa, 8 months of data for Germany, India, Italy, and EU, and
7 months of data for Japan and Mexico. Data for China is based on China Customs Data. The last column statistics is based
on the available annual data from COMTRADE and OECD as of 1 March 2021.
What factors led to the differences between the COVID trade collapse crisis and the
last one? We can analyse this in terms of the causes and triggers, and the sequences of the trade
collapse. Firstly, according to accounts in the literature, international trade came to an abrupt
halt during 2009, leading to a “great trade collapse”.vi It was sudden, severe, and synchronized,
triggered by the Great Recession in the economy and financial markets. For instance, UK GDP
declined by 4.2%, while exports fell by 25%. The same pattern was observed for all countries,
as shown in Figure 5.2. China and India actually experienced economic growth of 9.4% and
7.9%, but even exports from these two countries declined by 16% and 2.8%.
In contrast, the pattern of the 2020 trade collapse is different. Comparing all the
countries presented in Figure 1, GDP decline in 2020 was stronger, with a 1.6% overall decline
in 2009 versus 6.9% in 2020. Despite the stronger decline in economic activity, trade has not
been impacted as strongly as in 2009. For all the countries presented, exports declined by 21.6%
in 2009 and by 14.6% in 2020.
Secondly, the global trade collapse of 2009 was caused by a strong negative demand
shock,vii which pushed commodity prices into freefall. Not surprisingly, countries that rely on
exports of natural resources, such as Russia and Saudi Arabia, had the sharpest declines in
exports in 2009 (35.5% and 38.7%, respectively). This explains why Canada and South Africa,
which are also both big exporters of natural resources, likewise saw very large declines in
exports.
It is not too hard to understand why the 2020 trade collapse was relatively mild and
recovery started quickly. Unlike the 2009 collapse, which was mainly driven by the massive
demand shocks generated by the financial crisis, the COVID trade disruption was caused
initially by supply shocks, primarily due to virus containment and social distancing measures
11put in place.viii Then, the rapid shutdown of the economy led to domestic demand shocks that
generated startling disruptions, exemplified by the temporary shortages of everyday
commodities from fresh vegetables, eggs, milkix and meat, x to toilet paper, xi attributable to
panic-buying coupled with an alleged lack of responsiveness of hyper-efficient but rigid
modern supply chains (O’Leary, 2020: O’Neil, 2020; Shih, 2020).
Thirdly, the role of global value chains in the two trade collapses differed. Supply chain
dynamics vary considerably, not just by industry but also by the characteristics of specific
products, the responses and strategies of the producers (Gereffi 2020), and the distribution
channels involvedxii (Staritz et al., 2011). Notably, in both crises, GVCs played a large but
differing role. In 2008-2009, GVCs propagated the crisis from one country to another, since
the shocks were synchronous across the globe due to all countries experiencing the financial
crisis at the same time. This time it was different, as countries went in and out of lockdowns
for different periods and used international trade to cushion domestic shocks. Therefore, GVCs
played a moderating role as the tool to smooth and diversify risks. One area that has featured
prominently is the production and trade of COVID vaccines, which is crucial for fighting the
current crisis. Availability of many types of vaccines produced in different countries is actually
a good thing that reduces the risk of further economic problems.
In addition, in 2020 commodities prices and their export values remained relatively
stable or experienced an increase, as in the case of metals. The only exception to this rule is oil
and gas, for which prices fell, but significantly less – by 54% in 2008 and only by 21% in
2020.xiii As a result, this crisis did not hit commodity exporters as hard, instead having a larger
impact on exporters of cars, aircrafts, and their components.
Finally, trade relies on the provision of trade credits, as there is a long-time lag between
shipping goods and their delivery. In 2009, credit markets got frozen, and this shock spilled
over into letters of credit and similar financial instruments, which are essential for the wheels
of global trade to turn smoothly.xiv In 2020, the situation was different, since credit markets
continued to function.
In conclusion, in 2009 when GVCs amplified the crisis, the shocks were synchronous
across the globe, as all countries experienced the financial crisis at the same time with (almost)
everyone losing out. In 2020, local supply-side conditions played a large role in driving trade
shocks, and that relied on policy responses both in economic and social terms. This time,
countries experienced catastrophic declines in their production capabilities, but were able to
stay afloat due to asynchronous pandemic shocks. Leveraging diversified sources of goods and
services, countries managed to smooth their consumption with much lower losses in welfare.
12Hence, the trade effects across the world were asynchronous and the speed of recovery from
trade collapse varied. This means that, in 2020, the degree of trade disruption in a country
depended on the nature of its products serving GVCs, the successful control of the pandemic,
policy responses to support businesses, as well as the ability to seize new exporting
opportunities to fill gaps in global markets. Put differently, there have been winners and losers
from the COVID shock.
3. How did UK trade perform through the
COVID-19 crisis?
To understand the UK’s trade performance during the COVID-19 crisis, we consider the
aggregate level trade flows during 2020 and in the preceding years, followed by the aggregate
product level trade flows to identify some specific trends in different types of goods. This is
followed by regional aggregate trade flows, to identify overall trends in global markets. Finally,
we turn to some of the UK’s important market destinations (US, Germany and China) to
investigate its performance in relevant products versus competitor countries.
3.1 Aggregate trends
Using monthly aggregate trade flow data between January 2017 and September 2020, we
provide an overview of the trends in the UK’s exports and imports and compare to its peers.
As shown in Figure 2, the level of UK exports between January-September 2020 was 17.0%
lower and UK imports were 14.3% lower relative to the same period in 2019. In fact, UK
exports after January 2020 were consistently below the trend, reaching their sharpest decline
in May 2020 year-on-year (33.5%, YOY) and slowly recovering in the following months. By
September, exports were 14.4% lower than the same period in 2019, and this was even below
the level in 2017. An international comparison depicts similar sharp declines among the UK’s
peers since COVID hit China in January. However, the statistics suggest that the UK had a
deeper decline and slower recovery compared with Germany, Italy, Spain and the US. It is
noteworthy that the slowdown in growth did not start in 2020. In fact, UK exports have been
growing more slowly than most other countries since 2017.
UK imports also experienced a severe decline, dropping to the lowest point in April
(30.3% decline, YOY) and May (32.1% decline, YOY). However, a dramatic increase in the
following months saw total imports considerably exceed the trend line in September (3.8%
13higher YOY). This may initially suggest some hold-up problems in the earlier months.
However, as our further analysis shows, the import recovery is in fact driven by volatility in
the trade of gold, while other imports remained below the trend line.
Overall trade statistics can only offer limited information about trends and little on
specific dynamics underneath. To understand what causes such diverging behaviour of exports
and imports at the aggregate level, and which sectors are driving these results, more detailed
analysis at product level is required, which we turn to next.
Figure 2: UK export and import (2017-2020)
Source: COMTRADE, Author’s calculation. The 2020 figures are based on Q1-Q3.
3.2 Product trends
We first consider the top six products of UK exports and imports in terms of their economic
significance, measured at Harmonized System (HS) 2-digit level, together they accounted for
57% of all UK exports in 2018.xv We also identify the fastest growing and declining products
exported and imported over the same period to pinpoint emerging trends.
The 2020 exports and imports in the UK’s top products in Table 2 show some striking
features. All but gold in the UK’s top six most-exported products have experienced sizeable
declines in monthly terms between January and September 2020. Together accounting for 47%
of all exports, the top five flagship products put significant downward pressure on exports.
Mineral fuels, as an intermediate input to gas and petroleum, had the sharpest decline during
the first three quarters in 2020, seeing a YOY monthly reduction in exports of 36.7%. This is
largely due to demand shocks caused by travel restrictions and was seen elsewhere globally.
14Cars exports have declined almost as much as Mineral fuels. On average there was a
36.5% YOY monthly reduction in exports of cars in 2020. The COVID pandemic presented
the global car industry with an unprecedented challenge. Following the complete lockdown in
the first quarter in China, the world’s largest car market, the pandemic arrived in Europe and
later elsewhere, causing the shuttering of production and supply-chains to collapse. The supply
shocks were followed by demand shocks for the carmakers, given the unprecedented job losses
and income uncertainty among consumers. UK car exports did, however, recover quickly to
the trend level by September 2020, and overall suffered similar disruption to that of German
carmakers. However, some industry experts argue that the pandemic merely accelerated the
transformation of the car industry towards electric and digital technologies, which means that
the decline of traditional cars markets could be seen to follow an expected pattern.xvi
Machinery and mechanical appliances experienced a YOY monthly fall of 18.7%,
followed by a slightly smaller decline in electronic machinery products of 15.3%, both of which
were exported considerably below the trend. Also, export of pharmaceutical products did not
experience the boost that might have been expected. This is likely due to the strict export
restrictions imposed in 2020.
Gold was the only main product that has been traded consistently above typical levels
throughout the period, especially in the most severe upsurges of the pandemic in April and
September 2020.
Turning to the main items of UK imports, we see a clear picture of import reduction, in
Table 2. The symmetric decline of imports in machinery and mechanical appliances may
suggest the decline was due to global production network disruptions. The decline in electronic
machinery products recovered to pre-pandemic levels by September 2020. This can be
explained by strong consumer demand for semi-durable goods, electrical appliances and
electronic devices after the UK economy emerged from the first lockdown and consumer
confidence began to grow. As a result, consumers who delayed purchases of large consumer
items in the first half of the year were much more active in the 3rd quarter of 2020.xvii Evidently,
there was a symmetric decline of mineral fuels imports which mirrored the decline in exports,
which looks even more enduring; these products have been traded considerably below trend
levels due to weak demand caused by travel restrictions.
Table 2: UK trade by products (Q1-Q3, 2020)
Products Monthly Export Products Monthly Import
exports, growth, imports, growth,
billion USD % YOY billion USD % YOY
15Top 6 exports of UK Top 6 imports of UK
Mineral fuels (HS27) 2.176 -36.7 Mineral fuels 2.745 -41.9
(HS27)
Cars (HS87) 2.659 -36.5 Cars (HS87) 4.302 -33.5
Machinery and 4.918 -18.7 Machinery and 5.595 -20.4
mechanical mechanical
appliances (HS84) appliances (HS84)
Electrical machinery 1.978 -15.3 Electrical 4.189 -15.0
(HS85) machinery (HS85)
Pharmaceutical 2.002 -9.6 Pharmaceutical 2.007 -10.9
products (HS30) products (HS30)
Gold (HS71) 3.806 15.9 Gold (HS71) 8.823 32.7
Top 6 fastest growing exports Top 6 fastest growing imports
Ores, slag and ash 0.017 19.7 Arms and 0.066 18.9
(HS26) ammunition (HS93)
Other plants (HS12) 0.023 26.3 Gold (HS71) 8.823 32.7
Explosives; 0.007 28.2 Other plants 0.102 37.0
pyrotechnic products; (HS12)
matches; (HS36)
Manufactures of 0.001 95.4 Tobacco (HS24) 0.063 66.2
straw (HS46)
Vegetable products, 0.000 102.0 Ships and boats 0.090 85.7
other nes(HS14) (HS89)
Ships and boats 0.219 126.4 Textile articles nes 0.538 145.0
(HS89) (HS63)
Top 6 most declining exports Top 6 most declining imports
Tobacco (HS24) 0.001 -80.6 Furskins and 0.003 -49.8
artificial fur (HS43)
Furskins and artificial 0.002 -46.8 Wool (HS51) 0.020 -49.1
fur (HS43)
Raw hides and 0.018 -39.3 Works of art 0.137 -46.3
leather (HS41) (HS97)
Mineral fuels (HS27) 2.176 -36.7 Silk (HS50) 0.002 -44.4
Cars (HS87) 2.659 -36.5 Cork and articles of 0.002 -42.8
cork (HS45)
Silk (HS50) 0.002 -36.1 Mineral fuels 2.745 -41.9
(HS27)
Source: COMTRADE, Author’s calculation. The 2020 figures are based on Q1-Q3.
When we extend the horizon to observe trade in goods trends over a longer period since
2017 as shown in Figure 3, we notice the striking flatness in the overall trends of the top
products prior to 2020. This suggests a lack of growth in exports of these products over the
past few years. As we will further explore in relation to specific export destinations in Section
4.4 below, it appears that the lack of export growth in these products is rather UK-specific.
16Figure 3 Top 6 UK exports by value in 2017-2020
Cars Electrical machinery Gold
8
6
4
2
0
Machinery and mechanical appliances Mineral fuels Pharmaceutical products
8
6
4
2
0
1
m1
1
1
1
1
1
m1
1
1
m1
1
m
m
m
m
m
m
m
m
m
17
18
19
20
17
18
19
20
17
18
19
20
20
20
20
20
20
20
20
20
20
20
20
20
Year
Export Fitted values
Source:
Graphs COMTRADE, Author’s calculation. The series are up until 2020 Q3.
by description
Looking beyond the top 6 products exported and imported, we investigate the products
that experienced the strongest growth and steepest declines in international markets in 2020.
As seen in Table 2, more observations can be drawn from the aggregate statistics on UK exports.
Clearly, not all types of products suffered from the same level of disruption, with some markets
even growing rapidly. It is arguable that the COVID pandemic has generated winners and
losers in terms of overseas trade.
A few products in particular stand out as having boomed in export markets. Ships and
boats (HS 89) expanded their export values by 126% per month on average in 2020. The sector
appears to be the biggest winner in the goods export market during the COVID pandemic,
reporting on average $219 million in monthly exports. This, however, should not be seen as an
opportunistic blip. Britain’s shipbuilding and boatbuilding revenue has been increasing in
recent years – it grew by 11.4% in 2018 and totalled £4.76 billion in turnover, followed by
further growth of 2.9% in 2019.xviii A closer examination of the divisions in the sector suggests
that British boating companies have been quickly growing their overseas markets over the past
few years, with rising global sales of boats for leisure and sports. This year’s fast growth in
exports is clearly a sign of the sector’s continued strong performance, possibly driven by
demand from socially-distancing consumers for alternative leisure choices, such as sailing and
water sports.
Other goods that performed well during this period include vegetable materials for
plaiting (HS 1401) and other vegetable products (HS 1404); these sectors doubled their exports,
17albeit from a very low base. Exports of other plants (HS 12), including seeds, fruit, and spores
used for sowing (HS 1204-1209), plants and parts of plants (HS 1211) have also been steadily
growing.
On the losing side, we also observe that tobacco exports shrank by 80% monthly this
year, which puts this sector in the unenviable position of most-declined product group. This
could be the result of three factors. During the COVID pandemic, researchers highlighted an
association between tobacco smoking and adverse COVID disease outcomes, which reinforced
more general ‘quit smoking’ messaging in societies worldwide. xix Secondly, lockdown has
both forced people to work at home where they must share space with others and limited their
access to tobacco supply. Thirdly, weakened demand due to reduced income may have
impacted on tobacco consumption. It is impossible to predict if this trend will continue,
although there is clear evidence that COVID offers an incentive for tobacco cessation.xx
Moreover, certain luxury goods experienced a serious decline in export markets,
ranging from 30-40% monthly YOY compared to the same period in 2019. Specific examples
include fur skins and artificial fur, raw hides and leather, and silk, reflecting weakened global
demand.
3.3 Regional trends
Next, we take a closer look at the regional dimension of UK trade to understand the specific
trends in different markets.xxi Figure 4 and Figure 5 summarize UK monthly performance in
exports and imports, aggregated by global regions and years. UK exports fell short of the
previous years’ levels in most regions, including in the EU and North America which saw
declines in exports by 18.8% and 16% respectively. UK imports from these regions also
dropped by 22.5% and 13.5%. The only exception to the falling exports is Europe and Central
Asia (i.e. non-EU European regions), where the UK exported more in 2020 than in 2019 by
14.75%. Further, a different dynamic is seen in the East Asia and Pacific market where the UK
exported 20% less by value but increased imports by 4.6% on a YOY monthly basis. Appendix
Table A2 reports the detailed monthly statistics by world regions.
18Figure 4:UKRegional
Exports: trends
RegionalinTrends,
the UK exports, 2018-2020
2018-2020
20 60
18
% Change of export value, per month, simple average
40
16
Bln USD per month, simple average
20
14
0
12
10 -20
8
-40
6
-60
4
-80
2
0 -100
East Asia & EU Europe & Latin America Middle East North South Asia Sub-Saharan Total
Pacific Central Asia & Caribbean & North America Africa
Africa
Regions
2018 2019 2020 2018 2019 2020
Figure 5:UKRegional
Imports:trends inTrends,
Regional the UK2018-2020
imports, 2018-2020
35 40
% Change of import value, per month, simple average
30 20
Bln USD per month, simple average
25 0
20 -20
15 -40
10 -60
5 -80
0 -100
East Asia & EU Europe & Latin America Middle East North South Asia Sub-Saharan Total
Pacific Central Asia & Caribbean & North America Africa
Africa
Regions
2018 2019 2020 2018 2019 2020
Source: COMTRADE, Author’s calculation.
Looking further into the UK monthly exports in 2020, we find that in all regions’
exports fell considerably, with the exception of Europe and Central Asia in the spring of 2020,
19as shown in Figure 6. What explains the export growth to non-EU Europe and Central Asia? A
more detailed investigation of monthly dynamics and trends points to an increase in gold
exports as an explanation. We find that the UK exported 1.6 billion USD of gold (HS 710813)
to Switzerland in March 2020, which amounts to 636% growth YOY, and further exported 4.2
billion USD of gold to Switzerland in April (200% growth, YOY), which is the highest value
of exports in our sample. Gold is considered a safe haven in times of uncertainty and its value
soared more than 30% during the pandemic.xxii The high volume of exchange between Zurich
and London is driven by these cities’ dominant positions in the world's refining and storage of
gold market respectively, forming the heart of the international gold market by building on the
UK and Switzerland's long-stable property laws, free-trade rules, specialist vault facilities and
- crucially - Heathrow and Kloten's central positions as global hub airports.xxiii
Further, the monthly trends suggest that UK exports recovered after the initial downfall,
but subsequently experienced a second hit in August 2020. As a result, the level of exports by
September in all regions except Europe and Central Asia had not recovered to the trend line.
Exportwith world regions
Figure 6: Monthly UK export
Export to EU Export to East Asia & Pacific
22 7
20
6
18
16 5
14
12 4
2017m1 2018m1 2019m1 2020m1 2021m1 2017m1 2018m1 2019m1 2020m1 2021m1
Year Year
Export to Europe & Central Asia Export to Latin America & Caribbean
6 .9
5 .8
.7
4
.6
3 .5
2 .4
2017m1 2018m1 2019m1 2020m1 2021m1 2017m1 2018m1 2019m1 2020m1 2021m1
Year Year
Trade value, bln USD Linear trend
20Export
Export to Middle East & North Africa Export to North America
3
8
2.5 7
2 6
1.5 5
1 4
2017m1 2018m1 2019m1 2020m1 2021m1 2017m1 2018m1 2019m1 2020m1 2021m1
Year Year
Export to South Asia Export to Sub-Saharan Africa
1 .8
.7
.8
.6
.6 .5
.4 .4
.2 .3
2017m1 2018m1 2019m1 2020m1 2021m1 2017m1 2018m1 2019m1 2020m1 2021m1
Year Year
Trade value, bln USD Linear trend
Source: COMTRADE, Author’s calculation. The series are up until 2020 Q3.
Figure 7 shows monthly import dynamics. UK imports from almost all regions
recovered by the end of the investigated period, exceeding the trend line in September for
imports from East Asia and Pacific, Europe and Central Asia, and Sub-Saharan Africa. This
trend has been primarily due to 13 billion USD imports of gold, with major sources from Russia
(3.4 billion USD), Switzerland (3.1 billion USD) and Hong Kong (2.7 billion USD). However,
imports from the Middle East and North Africa, North America and Latin America and the
Caribbean did not recover, likely as a result of weak demand in the UK due to COVID and
supply shocks due to the lockdown in these economies.
Importwith world regions
Figure 7: Monthly UK import
Import from EU Import from East Asia & Pacific
16
35
14
30
12
25 10
20 8
15 6
2017m1 2018m1 2019m1 2020m1 2021m1 2017m1 2018m1 2019m1 2020m1 2021m1
Year Year
Import from Europe & Central Asia Import from Latin America & Caribbean
10 1.1
1
8
.9
6
.8
4
.7
2017m1 2018m1 2019m1 2020m1 2021m1 2017m1 2018m1 2019m1 2020m1 2021m1
Year Year
Trade value, bln
21USD Linear trendImport
Import from Middle East & North Africa Import from North America
2 8
7
1.5
6
1
5
.5 4
2017m1 2018m1 2019m1 2020m1 2021m1 2017m1 2018m1 2019m1 2020m1 2021m1
Year Year
Import from South Asia Import from Sub-Saharan Africa
1.5 1.5
1 1
.5 .5
2017m1 2018m1 2019m1 2020m1 2021m1 2017m1 2018m1 2019m1 2020m1 2021m1
Year Year
Trade value, bln USD Linear trend
Source: COMTRADE, Author’s calculation. The series are up until 2020 Q3.
3.4 Market level analysis of UK performance
How did the UK perform relative to its competitors in the main export market destinations? If
the COVID shocks had the same impacts, we would expect that, over a certain period, similar
collapses would have befallen other exporters of the same products in the same market
destinations. To answer this question, we focus on some of the UK’s more important export
markets - the US as the UK’s largest single-country trade partner, Germany the second largest
single-country trade partner and the largest EU partner, as well as China. We analyse China
not because of its current trade volume with the UK, which still account for less than 5% of the
UK’s total exports, but as a key emerging market with fast-growing domestic consumption
driven by a booming middle class. For the purpose of comparison, we consider the UK
alongside its European exporting peers Germany, France, Italy, Spain and the Netherlands.
3.4.1 United States
The US-UK trade in goods is worth about $130 billion annually (2018), comprised of half
exports and half imports, which makes the UK the 7th largest trade partner of the US and the
country’s second-largest European trade partner after Germany in terms of trade volume.xxiv
The UK accounts for around 3% of total US trade. Table 3 lists the most exported products to
the US market.
Table 3: US imports from the UK: Top 10 products
22Percentage
change in
HS Imports Imports Imports imports
Product names
code 2017 2018 2019 between
2019 and
2017 (%)
87 Vehicles 9.77 11.02 11.22 14.85
Nuclear reactors, boilers, machinery &
84 7.69 9.48 10.52 36.79
mechanical appliances, computers
30 Pharmaceutical products 4.59 4.99 5.11 11.38
Optical, photographic, cinematographic,
90 measuring, checking, precision, medical or 3.35 3.47 3.39 1.33
surgical instruments & accessories
27 Mineral fuels, oils, waxes & bituminous sub 3.08 4.39 4.07 31.96
Electrical machinery & equip. & parts,
85 telecommunications equip., sound 2.59 2.95 3.20 23.85
recorders, Television recorders
22 Beverages, spirits, and vinegar 2.08 2.15 2.23 7.44
97 Works of art, collectors' pieces and antiques 1.86 2.52 1.96 5.08
29 Organic chemicals 1.85 2.43 2.23 20.84
88 Aircraft, spacecraft, & parts thereof 1.49 1.86 2.45 64.98
Source: COMTRADE, Author’s calculation based on the reported imports of US, not exports of the UK. The two
statistics have noticeable discrepancies. The top 10 products are ranked according to 2017 imports volume. The
imports values are in USD billion.
The 2020 COVID-19 pandemic crisis saw a decline in UK exports to the US, illustrated
in Figure 8. In January 2020, the UK’s exports to the US were 5% up relative to January 2019-
ostensibly looking like the start of a good year. But they subsequently dropped by 40% in May
2020 (relative to May 2019) and in June-August, 2020 remained around 30% lower than in the
corresponding months of the previous year. In September 2020, total UK exports to the US
were still 9% lower than they had been in January and 17% lower than in September 2019. By
contrast, many other countries had already recovered their lost ground in the same timeframe.
Compared to the UK, the only country that saw a worse decline was France, which experienced
a 50% drop in exports in May 2020 relative to May 2019 and was still exporting 24% below
its previous year’s level in September 2020.
However, we argue that this decline should be seen in the context of the preceding
slowdown in UK export growth to the US compared to other EU exporters. During the 2017-
2019 period, UK exports grew more slowly than the five European comparators examined here.
The Netherlands noticeably increased exports to the US by 85% between 2017-2019. Spain
23and Italy increased exports to the US by 25% and 26% respectively during the same period,
while UK increased its exports by just 16%.
Figure 8: US imports from selected EU countries, 2017-2020
Note: 3-month moving average. Source: COMTRADE. Each country is presented by import index, with
January 2017 is taken as 1. 3 month moving average is used to smooth monthly trade data (simple average
of current month imports and 2 pervious months).
Looking at product level data allows us to analyse the relative export performance of
the UK to others. Over 2017-2019, we find that the UK increased its export of cars (HS 87) to
the US market by 14%, exports of machinery and mechanical appliances (HS 84) by 45%, and
exports of oil and gas by 33%. These growth figures are dwarfed by the Netherlands’ growth
of exports of cars (HS87) by 2.3 times, exports of machinery and mechanical appliances (HS
84) by 1.85 times, and oil and gas (HS 27) by 2.4 times. While the UK saw its export of
pharmaceutical products (HS 30) reduce by 5.5%, the Netherlands has grown pharmaceutical
products (HS 30) exports to the US by 3.3 times. Both Italy and Spain have increased their
exports of pharmaceutical products to the US by 91% and 27% respectively.
Overall, since January 2020, the UK’s decline in exports to the US appeared the
sharpest in both absolute and relative terms and the most prolonged among the major European
countries (except for France). This could be partially due to the structure of UK exports to the
US. Specifically, as shown in Figure 8, UK exports of cars declined by 70% in July 2020
relative to January 2020.xxv When UK cars exported to the US began to recover, increasing
from $100 million in May 2020 to $394 million in July to $720 million in September, exports
24of machinery and mechanical appliances (HS 84) began to deteriorate from $666 million in
July to $650 million in August, before growing to $693 million in September. Over the same
timeframe, some EU countries managed to keep exports to the US stable or even to grow them.
The Netherlands’ exports of organic chemicals (HS 29) had increased by 4.3 times in
September 2020 relative to January 2020. Meanwhile, Spain has performed strongly in
pharmaceutical products (HS 30), increasing its exports to the US by 47% in September 2020
relative to January 2020.
Analysis of market shares at product level reveals that the UK lost ground in its top
exported goods to the US market in 2020, shown in Figure 9. The top US import from the UK
in 2019 was cars, worth $11 billion, more than one-fifth of total exports to the US.xxvi The share
of UK cars fell to its lowest point in summer 2020 but has been gradually restoring its sales
since then. It is worth noting that China, Germany and Korea temporarily gained substantial
market share in April and May, when the other major exporters (Japan, Mexico and Canada)
were in more severe pandemic restrictions. However, by September the market shares of the
major car exporters to the US returned to their pre-pandemic levels for almost all countries,
with the noticeable exception of the UK.
Figure 9: US imports of cars from selected countries
Import of Cars to US
Canada China Germany
15
10
20
10
8
5 6
Market share of US import, %
0 0 4
Japan Korea, Rep. Mexico
40
25
15
20 30
15 10
20
10
5 5 10
2019m1 2019m7 2020m1 2020m7
RoW United Kingdom
16
4
14
3
12
2
10
8 1
2019m1 2019m7 2020m1 2020m7 2019m1 2019m7 2020m1 2020m7
Year
Graphs by Country
Source: COMTRADE, Author’s calculation. The series are up until 2020 Q3.
China increased its market share in US imports of machinery and mechanical
appliances (HS 84), reaching nearly 35% of the market in summer 2020, when its main
competitors – Mexico, Japan and Germany – lost their market shares. As in Figure 10, the UK
25has been on a downward trend since spring 2019 and had around 2% of the market in September
2020.
Figure 10: US imports of machinery and Mechanical appliances from selected countries
Import of MechEquip to US
Canada China Germany
8 35
8
7 30
7
6 25
5 6
Market share of US import, %
20
4 15 5
Japan Korea, Rep. Mexico
6
10 20
9 18
5
8 16
7 14
4
6 12
2019m1 2019m7 2020m1 2020m7
RoW United Kingdom
28 3.5
26 3
2.5
24
2
22
1.5
2019m1 2019m7 2020m1 2020m7 2019m1 2019m7 2020m1 2020m7
Year
Graphs by Country
Source: COMTRADE, Author’s calculation. The series are up until 2020 Q3.
The UK’s oil and gas (HS 27) market share in US imports has steadily declined, starting
from 3% in May 2019 and dropping to less than 1% during February-April 2020, while Canada
captured more than 50% of all US imports before collapsing to less than 40% in June 2020,
when Saudi Arabia filled the gap. See Figure 11.
Figure 11: Import of oil andofGas
Import from selected
Oil_Gas to US countries to US
Canada Colombia Iraq
55 6
6
50 5
4
45 4
2
Market share of US import, %
40 3
35 2 0
Mexico RoW Russian Federation
10 35 10
8 30 8
6 25 6
4
4 20
Saudi Arabia United Kingdom Venezuela, RB
20 3 6
15 4
2
10 2
1
5 0
2019m1 2019m7 2020m1 2020m7 2019m1 2019m7 2020m1 2020m7 2019m1 2019m7 2020m1 2020m7
Year
Graphs by Country
Source: COMTRADE, Author’s calculation. The series are up until 2020 Q3.
26US pharmaceutical products imports amounted to $115 billion (in 2018). In 2020,
Germany and Switzerland further increased their market shares by September to 22% and 14%
respectively, while Ireland has been losing some market share since summer 2020. The UK’s
share has been stumbling around 3-4%, going downwards in September 2020.
Figure 12: US imports of Import
pharmaceutical products
of Pharma to USfrom selected countries
Denmark Germany India
8 25
8
20
6 7
15 6
Market share of US import, %
4
10 5
Ireland Italy RoW
24 40
10
22
8
35
20
6
18
4 30
16
2019m1 2019m7 2020m1 2020m7
Switzerland United Kingdom
18 7
16 6
14 5
12 4
10
3
2019m1 2019m7 2020m1 2020m7 2019m1 2019m7 2020m1 2020m7
Year
Graphs by Country
Source: COMTRADE, Author’s calculation. The series are up until 2020 Q3.
In aerospace products, which is characterized by large monthly fluctuations, the UK
kept its share of the US market at around 7%, fluctuating between 6-8% (Figure 13).
Figure 13: US imports of Import
aerospace products
of Air to USfrom selected countries
Brazil Canada France
15 30 50
25 40
10
20 30
5
Market share of US import, %
15 20
0 10 10
Germany Italy Japan
15 10 20
8
10 15
6
5 10
4
0 2 5
2019m1 2019m7 2020m1 2020m7
RoW United Kingdom
30 10
25
8
20
15
6
10
2019m1 2019m7 2020m1 2020m7 2019m1 2019m7 2020m1 2020m7
Year
Graphs by Country
Source: COMTRADE, Author’s calculation. The series are up until 2020 Q3.
27One product where the UK increased its market share in 2020 was gold (HS 71). The
UK increased its market share from less than 2% in January 2020 to more than 4% in September
2020 (Figure 14). The major source of US gold imports in 2020 was Switzerland, but its share
of total US imports reduced considerably from 50% in April 2020 to less than 20% in
September 2020.
Figure 14: US imports of gold from selected countries
Import of Gold to US
Belgium Canada India
6 15 20
4 15
10
10
2
Market share of US import, %
5
5
0 0
Israel Mexico RoW
20 45
10
15 40
10 35
5
5 30
0 0 25
South Africa Switzerland United Kingdom
12 60 5
10 4
40
8 3
20
6 2
4 0 1
2019m1 2019m7 2020m1 2020m7 2019m1 2019m7 2020m1 2020m7 2019m1 2019m7 2020m1 2020m7
Year
Graphs by Country
Source: COMTRADE, Author’s calculation. The series are up until 2020 Q3.
3.4.2 Germany
Next, we turn to the UK’s second largest trade partner in the world and the largest in the EU,
Germany. The trade turnover between Germany and UK was worth $140 billion in 2018,
despite considerable trade imbalance between the two economies. For Germany in 2018, the
UK is the 5th most important export market ($97 billion, 6.2% of total exports), but only the
11th largest source of imports ($43 billion, 3.4% of total imports). Between 2017 and 2019, the
UK increased total exports to Germany by 8.5%, less than the export growth achieved by Italy
(12%), the Netherlands (14%) and Spain (20%), as well as the US (24%). Only France saw
lower export growth than the UK, growing its exports to Germany by 1.5%, largely due to the
decline in imports of aircraft and parts (HS 88) by 58%.
Looking at specific products, we find that the main underperforming sector in terms of
exporting to Germany has been automobiles, with UK exports of cars (HS87) to Germany
declining by 18% over the three-year period, while other sectors have seen reasonable growth
28(Table 4). Over 2017-2019, UK exports of machinery and mechanical appliances (HS84) grew
15%, exports of electrical machinery (HS 85) grew 13%, oil and gas (HS 27) grew 25%, and
exports of pharmaceutical products (HS 30) grew 18%. The Netherlands increased exports of
oil and gas to Germany by 48%. Spain was very successful in exporting aircraft and parts
(HS88), increasing these sales by 201% and cars (HS 87) by 24%. Interestingly, while fewer
UK-made cars were exported to Germany, France increased its exports of cars by 26%. France
also boosted exports of pharmaceutical products by an even greater 43%. The US had fast
growth in exporting oil and gas to the German market (164% increase), machinery and
mechanical appliances (HS84, 35% increase) and pharmaceutical products (HS 30, 30%
increase). This to some extent paints a picture of slowing UK exports to Germany following
the 2016 Brexit referendum, which may indicate some decoupling between the two economies.
Table 4: Germany's imports from the UK: Top 10 products
Percentage
change in
HS Imports Imports Imports imports
Product names
code 2017 2018 2019 between
2019 and
2017 (%)
87 Vehicles 6.09 5.95 5.03 -17.51
Nuclear reactors, boilers, machinery &
84 5.26 5.66 5.61 6.74
mechanical appliances, computers
Electrical machinery & equip. & parts,
85 telecommunications equip., sound 3.60 4.07 3.88 7.64
recorders, Television recorders
30 Pharmaceutical products 2.54 2.27 2.85 12.31
27 Mineral fuels, oils, waxes & bituminous sub 2.30 2.56 3.49 52.11
88 Aircraft, spacecraft, & parts thereof 1.91 3.19 2.10 9.88
39 Plastics & articles thereof 1.83 1.90 1.71 -6.57
Optical, photographic, cinematographic,
90 measuring, checking, precision, medical or 1.71 1.80 1.87 9.64
surgical instruments & accessories
99 Undefined 1.70 1.91 1.99 16.72
29 Organic chemicals 1.47 1.49 1.83 24.62
Source: COMTRADE, Author’s calculation based on the reported imports of Germany, not exports of the UK. The
two statistics have noticeable discrepancies. The top 10 products are ranked according to 2017 imports volume. The
imports values are in USD billion.
During the pandemic in 2020, the UK experienced the sharpest decline in exporting to
Germany, with only France seeing a larger fall. Other countries experienced less deep and less
prolonged decline in the first half of the year, which then recovered above the levels of January
292017 by September 2020, as Figure 15 shows. Relative to January 2020, the UK’s overall
exports to Germany fell by 21% up to July 2020.
Figure 15: Germany’s imports from selected countries
Note: 3-month moving average. Source: COMTRADE. Each country is presented by import index, with
January 2017 is taken as 1. 3 month moving average is used to smooth monthly trade data (simple average
of current month imports and 2 pervious months).
Analysis of market shares of Germany’s top imported products reveals that the UK has
lost ground in its top export goods in 2020. Firstly, as a proportion of Germany’s total car
imports (HS 87) - worth around $130 billion (in 2018) - the share of UK exports declined from
an average of 3.5% in 2019 to less than 2.5% in April and May 2020, before recovering to
around 3% in August 2020 (Figure 16). The US gained substantially in April 2020 when
European countries imposed strict lockdown measures, which depressed the market shares of
imports from the Czech Republic, France and Spain. Hungary impressively increased its
market share in July and August 2020 to almost 8% of total monthly car imports to Germany.
Italy also performed strongly after an initial decline in the first quarter of 2020, increasing its
share of German car imports by 29% in August 2020. The US also increased its market share
to 10% in August 2020.
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