The United Kingdom remains one of Portugal’s main trading partners, but it is there before and after Brexit. The exit from the European Union, coinciding with the Covid-19 pandemic, has reduced Portuguese exports and imports to “His Majesty’s territory” – starting from Saturday Carlos II – and although there has already been a slight recovery in exports, imports are still below the 2019 values .
According to data from the Bank of Portugal (BdP), the trade balance between the two countries has been positive for Portugal since the beginning of the century. This means that Portugal exports more goods and services to the UK than it imports. In 2020, the year the UK left the European Union – which happened on January 31st – the trade balance was €2.9 billion. Three years later, the value has more than doubled: 7.5 billion.
This improvement in the trade balance reflects a strong post-Brexit and post-pandemic recovery in exports. Since 2009, exports of goods and services to the UK have begun to accelerate, reaching a record high of €9.6 billion in 2019, but Brexit and the pandemic have seen exports drop to €6.5 billion in 2020. However, in 2022 Sales to London managed to surpass 2019 figures and exceed 10 billion. This growth has been observed in tourism, industrial supplies, transportation materials, and beverages due in part to inflation causing an increase in the prices of exchanged goods.
In addition to a strong recovery in exports, the trade balance with the United Kingdom has become more in surplus over the past three years due to a decrease in goods and services purchased by Portugal. Although the development of imports from the United Kingdom has fluctuated between advances and declines in the past two decades, 2019 was the year in which Portugal imported the most English goods and services: 4.3 billion euros. But imports last year did not exceed $3.3 billion.
In the case of merchandise imports, purchases from the UK shrank by half after Brexit. In February 2020, the first full month since the UK left the European Union, 208 million euros worth of goods were imported, according to the National Institute of Statistics (INE). That value fell by 55% to 94.3 million in February this year, three years after Brexit was formalized.
But the biggest shock came when the post-Brexit transition period ended in January 2021. In that month, imports of goods from the country fell 85% to 29.2 billion. This decline was transversal for various products, including machinery, mineral fuels and chemicals, which are among the most purchased commodities by the British.
Tourism weighs over 30% in exports
As for services, travel and tourism continues to be a heavyweight in exports to the UK. The BdP notes that in 2019, Portugal generated a record €3.8 billion in travel and other tourism-related services sold to Britons. 2020 changes in the movement of people due to coronavirus and the UK’s exit from the European Union, have seen these values drop to a third: 1.2 billion.
But last year, the 2019 record was surpassed. In all, travel and tourism services worth 3.3 billion euros were sold to the British. This means that in 2022 tourism will already account for 30% of exports to the UK. On the contrary, travel and tourism accounted for 321 million imports from the UK, less than half compared to 2019.
under the magnifying glass
An ancient relationship that allowed many trade surpluses for Portugal
Despite Brexit and the pandemic, relations with the UK have continued to give Portugal consecutive trade surpluses. Tourism, industrial supplies and beverages are the largest contributors.
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