Brexit Watch: Bercow’s Ruling Raises Risks, Preparatory Imports Increased — Panjiva
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Brexit Watch: Bercow’s Ruling Raises Risks, Preparatory Imports Increased

Brexit 68 European Union 406 Materials - Chemicals 93 U.S. 3297 United Kingdom 194

Yet another layer of Brexit uncertainty has been added after the British Speaker of the House of Commons, John Bercow ruled that a third vote on the Withdrawal Agreement proposed by the administration of Prime Minister Theresa May would not be allowed, the BBC reports. Speaker Bercow cited parliamentary rules that require significant changes to an amendment for a revote to occur.

The government will not have to wait to see whether European leaders vote in favor of a delay to Brexit at a summit running from Mar. 21 following a similar vote in the U.K. as outlined in Panjiva research of Mar. 14. Should that vote fail the Prime Minister may bring a revised amendment to pass the deal ahead of the formal Brexit date of Mar. 29, according to Reuters.

In the meantime there are signs of a pickup in short-term trade ahead of Brexit, potentially as businesses seek to hedge against disruptions caused by a no-deal outcome. Panjiva analysis of official data for British imports and exports shows bilateral trade climbed 5.1% year over year in January, up from a rate of just 2.4% in 4Q 2018.

The acceleration was driven by a 6.9% increase in imports in January, potentially reflecting some stockpiling. Shipments from the EU increased by 5.4% versus 8.6% for imports from the rest of the world, perhaps indicating concerns that disruption risks are more wide-ranging than just intra-EU customs matters.

RETURN TO GROWTH RATHER THAN APPARENT PANIC

Chart segments British merchandise trade by direction on a monthly and three-month average basis. Calculations include ONS data.  Source: Panjiva

The most significant growth has been in the chemicals sector where imports from the EU have climbed 12.0% year over year in January, including a 46.2% surge in organic chemical imports and 8.8% in pharmaceuticals. The turnaround in the latter is notable given imports had fallen by 9.0% in 4Q. Imports of the latter have been partly secured through a trade continuity deal with Switzerland though trade with Ireland and the U.S. have yet to be tied down in the even of a no-deal Brexit.

RECORD ORGANIC CHEMICALS SHIPMENTS EVIDENCE OF BREXIT EXPOSURE

Chart segments British imports from the EU by chemicals sector on a monthly and three-month average basis. Calculations include ONS data.  Source: Panjiva

The process of rushed shipments may already be slowing down, however. Panjiva data shows U.S. seaborne imports from the U.K. fell 11.0% year over year in February. The decline has been broad based though consumer related items including autos – which fell 11.3% – textiles and furniture have seen the most rapid declines. Industrial machinery meanwhile was largely unchanged compared to a year earlier.

AUTOS ALREADY SLOWING, CAPITAL GOODS STILL STRONG

Chart segments U.S. seaborne imports from the U.K. by product (HS-2).  Source: Panjiva

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