United Kingdom (UK) goods exports to the European Union fell 40.7% in January, according to the Office for National Statistics (ONS), while imports tumbled 28.8%.
The figures show the biggest drop since records began in 1997, and are the first since new trading rules between the UK and the EU came into force.
The ONS said temporary factors were likely to be behind much of the falls.
Meanwhile, new data showed the UK economy shrank by 2.9% in January amid the third lockdown.
The economy is 9% smaller than it was before the start of the coronavirus pandemic.
Both imports from and exports to the EU fell “markedly” in January, the ONS said. The value of goods exported from the UK to the EU fell by £5.6bn in January 2021, while imports from the EU dropped by £6.6bn.
The ONS said the fall in goods coming into the country were largely seen in machinery and transport equipment, and chemicals from the EU.
Car imports, as well as medicinal and pharmaceutical products, were particularly affected.
Accountancy firm KPMG pointed to Brexit as the likely culprit for the plunge in trade between the UK and the EU. In contrast, the UK’s trade with non-EU countries grew by 1.7% in January.
KPMG said intense stockpiling in December 2020 had brought some trade flows ahead of the Brexit deadline.
The ONS said companies may have been using up that stock instead of buying new goods in January.
In addition, the end of the temporary trading arrangement between the UK and the EU coincided with the discovery of a new strain of Covid-19 in the UK, which caused further complications and delays, after lorry drivers were required to take tests before crossing the border at the English Channel.
The figures are the first since the Brexit transition period ended and show the steepest falls since comparable records began.
However, the ONS said data showed that things had begun to pick up. Firms were reporting that trade was getting easier and trade levels started to recover towards the end of the month.
The number of businesses saying they were unable to export between the middle and the final week of January had fallen by 5.4%, it said, and those saying they could not import had dropped by 3%.
The ONS said the data for the period was “erratic”, while Goldman Sachs called it “noisy”, meaning there was a lot going on and it was too early to tell how much of the fall was a temporary blip.
However, the head of economics at the British Chambers of Commerce, Suren Thiru, said: “The significant slump in UK exports of goods to the EU, particularly compared to non-EU trade, provides an ominous indication of the damage being done to post-Brexit trade with the EU by the current border disruption.
“The practical difficulties faced by businesses on the ground go well beyond just teething problems and with disruption to UK-EU trade flows persisting, trade is likely to be a drag on UK economic growth in the first quarter of 2021.”
A government spokesperson said: “A unique combination of factors, including stockpiling last year, Covid lockdowns across Europe, and businesses adjusting to our new trading relationship, made it inevitable that exports to the EU would be lower this January than last.
“This data does not reflect the overall EU-UK trading relationship post Brexit and, thanks to the hard work of hauliers and traders, overall freight volumes between the UK and the EU have been back to their normal levels since the start of February.”BBC