UK exporters see mixed picture amid global uncertainty
A growing number of UK exporters expect their ability to compete in international markets to improve over the next year, according to the latest Business in Britain report from Lloyds Bank.
More than half (54%) expect their ability to compete in international markets to improve in the next 12 months, four points higher than six months ago.
Almost half of exporters (47%) said they had seen their overseas sales grow over the last six months, compared with just 21% who said they had fallen, with sales to the EU, the USA and China rising by 35%, 32% and 35% respectively during that time.
And despite facing continued uncertainty, almost half (47%) said they expected their overseas sales to increase over the next six months, compared with just 20% who expected international sales to fall.
The good news comes as the latest data from ONS revealed the value of British exports hit a record £621bn in the 12 months to June 2018, with service exports rising 2.2% to an all-time high of £278bn and exports of goods climbing 6.3% to £343bn.
However, more than 22% of respondents have stated that they have not reviewed their trading plans two years after the Brexit referendum. If this is the case across all UK exports this means that potentially as many as 50,000 exporters may not have considered nor factored any changes they may need to make to their trading strategies post March 2019.
Clive Higglesden, head of trade and supply chain product, at Lloyds Bank, said:
“We have to recognise that the Brexit negotiations can affect how businesses are feeling and this can change but it’s heartening to see UK exporters demonstrate confidence towards their trade prospects, especially in light of continued domestic and international uncertainty.
“However, while the ongoing negotiations around the UK’s departure from the EU and its potential impact are an important point on most businesses’ agendas, it’s maybe a cause for concern that up to 50,000 exporters may not have reviewed their own strategy since the referendum two years ago.
“It may be difficult to plan whilst there is uncertainty over the nature of the UK’s departure, but there is little doubt that businesses will face some degree of change in the months and years ahead. All exporters should be taking proactive measures in the interim to prepare for that.”
The Business in Britain report, now in its 26th year, gathers the views of more than 1,500 UK companies, predominantly small to medium-sized businesses, on a range of issues facing them.
Top UK export markets
Although nearly one in four (23%) British exporters expect the biggest opportunities for international trade to be with the USA, this figure has fallen from 30% at the end of 2017.
Similarly, 13% expect the biggest opportunities to come from China, down two points from 15% six months ago, while eight per cent cited Germany, down from 9%.
The fall in firms identifying these markets was caused by a significant increase in respondents to Lloyds Bank’s survey saying they ‘did not know,’ suggesting that firms are struggling to plan ahead amid such uncertainty.
Some 18% of exporters said they ‘did not know’ where they saw their biggest overseas opportunities now, compared with 6% six months ago.
Firms state the biggest barrier to exporting is exchange rate uncertainty, which was cited by 42%, the same proportion as six months ago.
Tariffs and quotas were cited by 35%, compared with 29% six months ago, while difficulty finding potential customers was mentioned by 32%, up from 26%.
Although the majority of exporters hold a positive outlook, 26% expect their ability to compete in international markets to deteriorate over the next year.
One in five (21%) said their overseas sales had dropped in the last six months, while almost as many (20%) said they expected their exports to drop over the next half year.
With negotiations ongoing between UK and EU diplomats over the future relationship between Britain and Europe, exporters most want to see the UK prioritise free trade agreements with USA (24%), China (12%) and the EU (11%) followed by Germany (7%) during discussions.
“Exporting for the first time can feel daunting, particularity when the global political and economic landscape is going through a significant period of flux.
“But with the falling value of the pound continuing to make our goods more attractive overseas, I’m certain there are lucrative opportunities out there for firms ambitious enough to pursue them.
“Our International Trade Portal* can also help both current and prospective exporters understand the best market for their products or services, the trading requirements and conditions they face and the buyers they may wish to work with.”