Goods exports to the EU reached £16.9bn in May, their highest level since the series began in 1997, according to the latest trade figures from the Office for National Statistics (ONS).
In fact, the ONS found that UK imports and exports of goods rose overall by £2.2bn and £2.3bn respectively in May 2022.
The higher exports to the EU are likely related to rising prices this year, because removing the effect of inflation, exports to the EU peaked at £13.9bn in May 2022, the highest levels since December 2020.
On the other side of the spectrum, imports of goods from Russia continue to decrease in May 2022, reaching their lowest levels since March 2004.
Goods exports ticked up slowly but remain well below their usual levels.
Discussing the latest ONS trade figures with City A.M. this morning, Jack Sirett, head of dealing at financial services firm, Ebury said: “The global inflation shock is driving up the price of goods around the world and clearly boosting the value of trade going in and out of the UK. Exports to the EU reached their highest level since the ONS began the trade data series when the effect of inflation is included.”
He added: “Higher inflation effects exports because of the uptick in input costs such as labour and materials. However, the strong figures even with the impact of inflation stripped out suggest demand for British products in the EU remains strong.
“Importers continue to report that the rising cost of materials is impacting their operations and financial performance as they either have to absorb these increases or pass them on to their customers.”Jack Sirett
“The figures also reflect the global nature of the current inflationary shock. The euro has been struggling, too, this year due to the headwinds of the war in the Ukraine, recession fears and the sluggishness of the ECB to raise interest rates,” Sirett explained.
“The weakening pound is also likely to start dampening trade for many importers as they goods they look to bring into the UK becoming increasingly expensive both through inflation and the deteriorating exchange rate,” he continued.
“This is particularly acute from those who import from the US as the safe-haven Dollar continues to outperform the sterling,” Sirett concluded.