9 minute read
International Trade
trade Falling sales but non-EU markets offer hope for exporters
The British Chambers of Commerce’s Trade Confidence Outlook for Q1 has revealed the stark issues facing UK exporters in the first months of this year.
The survey of more than 2,900 UK exporters showed that the percentage of firms reporting lower export sales had increased to 41%, up from 38% in the previous quarter. The percentage of businesses reporting increased export sales fell to 20%, down from 22% in Q4 2020.
The historical percentage balance data for this indicator shows that the proportion of firms reporting increased export sales remains at a historically low level and has, in fact, worsened compared to the previous quarter. The balance of manufacturers reporting increased overseas sales was down to -9% from -8%, while the balance of services firms for this indicator dropped to -26% from -22%.
For advance orders from overseas customers, the picture remained broadly the same. More than eight in ten (81%) hotels and catering firms reporting decreased advance exports sales, alongside 59% of retail and wholesale businesses. Worryingly, this suggests that exporters are not seeing signs of the situation improving in the short term.
Respondents cited Brexit and the impact of COVID-19 as the biggest causes of problems in trade. Firms told of issues such as shipping delays, increased cost of transporting goods and extensive paperwork requirements, with many seeing the problems they were facing as structural in nature rather than short-term issues likely to alleviate as companies adjusted to the changes in the UK-EU trading relationship.
Alan Rides, MD of Hounslow Chamber of Commerce, says: “First came the pandemic in 2020 which meant that the UK imported huge volumes of PPE from Asia. With little cabotage, these containers piled up around the ports, causing congestion. Then in 2021 came the gridlock after the Suez blockage resulting in a tidal wave of freight arriving in the UK to compound the container port congestion problem. This has resulted in our port of Heathrow handling over 40% of UK’s exports.
Recent ONS headlines show that exports of fish and meat recorded another month of steep declines in February as UK producers faced the burden of checks and regulations. Whereas in 2020 it took only 12 hours from fish being caught to delivery in the EU, now it could take two days or longer – much longer if there’s even the smallest of documentation issues with any of the total groupage consignment. Add to this a dramatic increase in costs, because instead of an EU export being a two-point process, it’s now a laborious 23-point process of inspections, documentation and certification.
“The net result is that UK-EU trade in both directions is down by more than 12%,” says Alan. “The good news is that exports (down 8% overall) are recovering faster than imports but when you look at these figures in more detail you realise that car, machinery and medical exports are now down only 5% compared with meat, dairy and fish, which are down by 30%. This will decimate this industry if we are not careful. The government needs to act.”
With the UK currently enjoying a V-shaped economic recovery – due in part to confidence gained from the successful COVID vaccination roll-out – and the Bank of England forecasting strong GDP growth of 7.25% this year, it’s clear that there will be trading opportunities for exporters. However, the best opportunities may lie further afield than the EU.
Alan says: “The ONS figures also show that exports to the EU are at 2010 levels, whereas exports to markets outside of the EU are at 2017 levels. Our advice, therefore, is to look for markets outside of the EU for best growth, but beware of risks.”
For best advice, contact Queens Award-winning Alan Rides at
alanrides@hounslowchamber.org.uk
and see the Chamber’s international trade webinar recordings on
https://www.youtube.com/channel/ UC7UehhkBGqDfJyZZkFV0a3w
Alan Rides MIEx (Grad) Chamber MD
Mark Hayward
THE EFFECTS OF POST
LOCKDOWN FOR BUSINESS
No-one can deny that 2020 and 2021 have been catastrophic for businesses, but we are moving towards easing of restrictions and importantly vaccination for all adults in the UK. The assistance that the UK government has done for the economy has been significant with furlough, grants and stamp duty holiday.
The UK property market has withstood the impact of the pandemic. Since last July, the UK property market has been on the rise, largely fuelled by the government temporarily cutting stamp duty. The result of the pandemic has meant that Land Registry says the average price of a property in the UK rose by 8.6% year-on-year in February 2021 to reach £250,341.
The truth is that when the furlough scheme ends there will be unemployment, it is projected this will rise to about 2.2 million people or 6.5% of the population. The industries which have been most affected are hospitality, retail and entertainment. Also, large numbers of young people have been impacted by the pandemic. The youth unemployment rate in the United Kingdom was 14.3 percent in the three months to February 2021, an increase of 2.6 percent when compared with the same period of 2020.
To survive retailers pivoted their business model and went online, those that couldn’t or wouldn’t closed. The number of chain stores in the UK fell by almost 10,000 last year, as the coronavirus accelerated the decline of the high street. New figures from PwC and the Local Data Company show that 17,532 shops shut last year and only 7,655 opened, meaning there was a decline of 9,877. No-one has been immune with John Lewis closing flagship stores and Top Shop Oxford Street for sale.
A side effect of the lockdowns in the UK has been that households have saved around £100bn. How this money will be spent could speed up Britain’s economic recovery. This “huge pent-up demand”, and big spending spree could help the economy bounce back more quickly than forecasters expected.
People in the UK in 2021 will need a growth mindset to build successful businesses, the ability to adapt is important in a post pandemic economy. Most people in the UK have been impacted by the pandemic, whether losing people or losing jobs. The outward looking British economy will need patience and ingenuity to rebound in 2022.
Please ask me any questions about building business on
mark.j.hayward@outlook.com www.absolutebusinessmindset.com/abmcoaching-services
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Insecure workers almost ten times more likely to receive no sick pay
More than two thirds of insecure workers in the UK receive zero pay when off sick, a new survey has found, prompting calls for greater protections and a ban on zero-hours contracts.
The shocking disparity in sick pay between workers in secure and insecure employment was revealed in a recent poll by TUC and Britain Thinks. The research showed that 67% of insecure workers say they receive no pay when off sick compared with only 7% of secure workers who didn’t receive financial protection. Effectively, this means that insecure workers are almost ten times more likely than their securely employed counterparts to not receive any pay when off ill. Insecure workers are defined as those whose contracts do not guarantee regular hours or income or those who are in low-paid selfemployment. Some of these workers who took part in the poll said they feared their employer would find someone else to do their job if they didn’t turn up to work. Fears about job security and income levels have been cited as a key driver of workplace stress in the pandemic.
The TUC said: “[This poll] provides a stark example of how inadequate employment protections compel insecure workers to continue working throughout the pandemic. Insecure workers who need to self-isolate or take time off sick have to continue going to work in order to pay the bills.”
The TUC has called for several measures designed to protect insecure workers, including a ban on zero-hours contracts and an increase in sick pay entitlement. In particular, the TUC wants: • removal of the waiting period for sick pay for all absences
• an increase in sick pay to £330 a week – the equivalent of a week’s pay at the real living wage • provision of additional funds to ensure employers can afford to pay sick pay • unions to have access to workplaces to tell workers about the benefits of union membership and collective bargaining • new rights to make it easier for working people to negotiate collectively with their employer • the establishment of new bodies for unions and employers to negotiate across sectors, starting with hospitality and social care • the effective abolition of zero-hours contracts by giving workers the right to a contract that reflects their regular hours • at least four weeks’ notice of shifts
