Rise in demand for imported goods shows UK economy is moving but needs to export more.

UK trade performance in November showed a 6.1% increase in imports (after inflation) and a 1.7% growth in exports leading a growing trade gap.

Since the UK left the EU, we have signed 71 new trade deals but all with smaller markets. Although we are in the final stages of an agreement with India and the Gulf, to replace the EU we need the other world’s bigger markets of China and USA to sign agreements with us to lift export volumes significantly said Alan Rides, Chamber Chief Executive. We have also seen that investment levels in the UK have flatlined to 2014 levels. The result of all of this plus Covid means that the UK is now the only G7 economy to show negative growth of -0.8%. In comparison, the USA and Canada had 4.4% and 3% growth respectively and our neighbours in Germany, France and Italy have growth of between 1.8% and 0.3% as reported in the BBC news [30th January] based on OECD/ONS 2022 figures.

Alan also said that the good news is that:

• In the 12 months to September, exports to Sweden rose by 42%, by over 32% to Ireland, by 30% to Belgium, and by over 28% to France.

• In the 12 months to June, UK exports of both goods and services to our top Commonwealth export markets shows an increase, of over 43% in exports to India, 19% to Singapore, and over 15% to Canada.

• Against all expectations, UK retail sales topped all analyst estimates across all sectors including food, and UK consumer confidence data also rose in November.

• London has climbed ahead of San Francisco and New York to become the world’s biggest centre for FinTech investment.

• London has retained its second-place ranking behind New York in the 2022 Global Financial Centre Index. Paris ranked 11th and Frankfurt 16th.

Reacting to the ONS Trade figures for November, William Bain, head of trade policy at the BCC, said: “UK trade performance improved in November led by a 6.1% increase in goods imports (adjusted for inflation).

“Goods exports also picked up, rising by 1.7%, but concerns about the impact of the Brexit deal continue due to a 1.2% fall in goods exports to the EU.

“Early estimates of trade in services showed a flat picture –with exports down by 0.2%, and imports by 0.6%, adjusted for inflation.

“Looking at a comparison over the three months to the end of November with the three months to the end of August, goods exports to the EU were 4.9% lower over that period.

“While the UK did better than its peers in overall trade in November, the Export Strategy needs to deliver in 2023 given the global economic headwinds UK goods and services exports are currently facing.”

For help in growing into new international markets please contact your Chamber and attend our regular international trade seminars led by Alan Rides Chamber Chief Executive who is a former DIT Trade Officer.

Goods Imports

In November 2022, UK goods imports rose by 6.1% after removing effects of inflation (values were 3.5% less before this removal). The rise in goods imports from the EU was led by higher machinery and transport equipment imports (ship imports from Finland were particularly noteworthy). Non-EU goods imports were boosted by higher sales of cars from China and aircraft from the US. Fuel imports from Qatar and Norway continued to fall in November.

Goods Exports

Falls in EU goods exports values were driven by lower sales of fuels for the fourth consecutive month. The rise in non-EU goods exports values was largely down to increases in machinery and transport equipment sales, including aircraft to Qatar and motor vehicles to the US and China.

Services

On services, excluding inflation, imports fell to £17.8bn in November and exports to £29.5bn – a reduction of 0.6% and 0.2% respectively from October.

Three-month trend

Looking at the three months to the end of November, total UK goods imports from both the EU and outside the EU fell by 3.2%, compared with the three months to the end of August. The fall in EU goods exports over that period was 4.9%. Over the same timescale overall goods exports fell by 1.5%.

The services picture was better with a rise of 2.0% in exports over that period offset by a 1.2% decline in imports. Total trade values over that period increased by 0.3% in exports but were 2.6% lower in imports.

Trade Deficit

Excluding inflationary factors, the total trade deficit narrowed by £3.8bn in the three months to the end of November.