In the UK, which left the EU single market and began trading under a new UK-EU Trade and Cooperation Agreement (TCA) at the start of the year, near-term frictions in goods trade are increasingly apparent with rules of origin requirements piling on costs & administrative burdens for corporates and disrupting supply chains. The UK’s overall trade declined by 21% month-on-month in January, as both exports and imports declined by almost a fifth, but there was a sharp decline in UK-EU trade (-33.2% month-on-month). Indeed, UK exports to the EU declined by 40.5% in January, in contrast to exports to non-EU countries, which increased by 3.6%.
Ultimately, the recovery in the coming months will depend on how quickly pent up demand for goods meets rising vaccine distribution & easing restrictions. Yet the latest figures also highlight the importance of active supply chain management to help manage anticipated & unforeseen events.
The last year has taught us that the resilience and reliability of supply chains is incredibly important. Corporates should be looking to achieve as much visibility and transparency of their supply chains as possible – both suppliers and suppliers of suppliers – to help identify & understand risks to disruption, and map supply chains end-to-end. Only then will businesses be in a position to assess and mitigate these risks.
Where bottlenecks may emerge as the recovery proceeds is difficult to predict. Huge pent-up demand may indeed outstrip supply as more economies start to emerge from lockdown, but the asymmetries in regional and national progress on tackling the pandemic further underscores the importance of careful planning.
Thanks to Aastha Gupta for their contribution to this publication.