FOI REF: FOI-2023-1310
You asked
I have read reports in the press that one of the factors that has a bearing on how we compare trade figures with the EU pre and post Brexit is that the classification of some goods has changed as a result of our agreement. Where can I find figures or examples of this reclassification and are there tables that show what would have happened if the reclassification had not occurred?
We said
Thank you for your request.
Since the UK left the EU, the arrangements for how the UK trades with the EU have changed. While the way in which traders report, the classification of their goods has not changed. There have been some data collection changes affecting trade data following EU exit which can make comparisons of UK trade with the EU pre- and post-EU exit challenging.
A summary of the data collection changes, their impact and the adjustments made to account for these changes are detailed in this response. These data collection changes are also summarised in detail in our series of articles, accessible via the following link: Impact of data collection changes on UK trade statistics.
Exports to the EU
In January 2021, HM Revenue and Customs (HMRC) implemented a data collection change affecting data on UK exports to the EU. HMRC investigated the change in data collection methods for UK exports to the EU, concluding that, when comparing the components that form the trade in goods data in 2020 and 2021, there was a discontinuity of around 5% by value between the two compilation methods. This discontinuity was caused by a combination of data not previously collected under the Intrastat survey, such as Parcel Post and non-VAT registered traders, along with a group of traders using a new or different identifier for their customs declarations.
Imports from the EU
In January 2022, HM Revenue and Customs (HMRC) implemented a data collection change affecting data on imports from the EU to GB. HMRC investigated the change in data collection methods for GB imports from the EU, concluding that, when comparing the components that form the trade in goods data in 2021 and 2022, there was a discontinuity of around 6% by value between the two compilation methods. This discontinuity was caused by a combination of data not previously collected under the Intrastat survey, such as Parcel Post and non-VAT registered traders, along with a group of traders using a new or different identifier for their customs declarations.
We applied adjustments to our estimates of goods imports from the EU for 2021 to reflect this data collection change, which brought imports and exports statistics onto a like-for-like basis in 2021. Following these adjustments, the full time series for goods imports from and exports to the EU contains a discontinuity from January 2021 resulting from the move from Intrastat to customs declarations. We are continuing to work with HMRC to consider possible options to account for this discontinuity.
Staged Customs Controls
In 2021, the use of Staged Customs Controls (SCC) allowed customs declarations to be reported up to 175 days after the date of import for imports of non-controlled goods from the EU to GB. Full customs controls for importing goods from the EU to GB were introduced in January 2022, as such, July 2022 marked the first full month of data where delayed customs declarations submitted under SCC could not be included.
Because of the change in trade data collection methods from the Intrastat Survey in 2021 to full customs declarations in 2022, any use of SCC caused double counting in UK trade statistics during 2022. This is because some imports in the second half of 2021 that were recorded via the Intrastat Survey appeared again on customs declarations in the first half of 2022.
We have analysed the impact of SCC on imports from the EU to GB and, while our investigations are not yet fully complete, we have identified approximately £6 billion of imports conducted in 2021 but submitted via customs declarations in 2022. This represents 2% of total imports from the EU to GB in 2022, or 4% during the first half of 2022. HMRC has contacted and received confirmation from traders accounting for approximately two-thirds of these imports by value. This process has so far confirmed £4.2 billion of imports as being submitted using SCC.
We will continue with our analysis in collaboration with colleagues at HMRC, and we plan to include a finalised adjustment in our upcoming GDP quarterly national accounts, UK: April to June 2023 and Balance of payments, UK: April to June 2023 releases publishing on 29 September 2023. This will represent a downward adjustment to EU imports of trade in goods data for the period from January to June 2022.