International Trade

UKCA Marking update welcomed

- but future clarity needed

The UK government announced in November that businesses have been given an additional two years to comply with the new UKCA marking requirements.

CE marking can now continue to be used for certain goods placed on the GB market until December 31, 2024

Head of Trade Policy at the British Chambers of Commerce, William Bain was encouraged by the news. “In the midst of a cost of doing business crisis for many firms across Great Britain, this announcement brings welcome respite from major changes on electrical and consumer products. He added: “Businesses will be breathing a huge sigh of relief as this decision pushes back costly alterations on product marking that were due to come into effect in a matter of weeks.

BCC research carried out last year found that only 8% of business were in favour of getting rid of the current EU marking system, called CE, by the start of 2023, and 59% of businesses, affected by the decision, wanted to keep it. Bain commented: “They see strong benefits in having a single system for testing and marking of industrial and electrical goods for business. Having to use two marking systems, one for in the UK and one for the EU market, will increase costs and also lead to limited choice for customers if firms decide not to do both”. The BCC view is that there should be no changes on product marking until beyond 2026, and for the issue of UKCA and CE certification to be resolved then for all products.

“Today’s push back is a welcome first step, but much deeper engagement with industry is still needed to devise a plan that works to avoid extra costs for both importing and exporting businesses, and consumers”.

William added: “Ultimately we also need a system that will avoid any unnecessary future cliff-edges on compliance.”

Slowdown hits UK trade as impact of cost pressures grows

All eyes will be on the next batch of trade data for November 2022 which will be released in January 2023. The most recent numbers available (for September 2022) certainly provided food for thought. As William Bain, Head of Trade Policy at the BCC, explains the effects of higher inflation and reduced consumer spending globally on UK trade are growing clearer as both imports and exports of goods in September slowed. On the plus side, he pointed out that UK services trade held up, and although areas such as hospitality were being hit at home, the demand for financial and business services products abroad remains stronger. “To counter these strengthening headwinds for goods trade, we urge the UK Government to implement the recommendations of our Business Manifesto,” Bain said. “To have any hope of expanding goods export opportunities for firms, the UK’s Export Strategy must be reinforced. This and other measures, such as negotiating reduced red tape in the EU trade agreement, will help mitigate the impacts of rising inflation on consumers and businesses at home.”

Analysis - imports

In September, overall goods imports to the UK fell by 5% (£2.8bn) with EU imports down by 7.3% (£1.9bn) and non-EU imports down by 3% (£1bn), primarily down to lower gas imports from Norway and the fall in oil prices globally. Excluding inflation overall imports fell by 6.1% (£2.6bn) in September. Among the largest falls in imports from the EU by sector was in chemicals (down by £0.7bn). Fuel imports from outside the EU, principally Norway, fell the most in September - down by £1.3bn.

Analysis - exports

UK goods exports fell in September by 4.7% (£1.6bn). The drop in exports to the EU was higher than to the rest of the world - 5.1% (£0.9bn) compared with 4.2% (£0.7bn). Excluding inflation, overall goods exports fell by 4.8% (£1.4bn) in September. On exports to the EU the largest falls were in machinery and transport equipment (principally to Germany) and in fuel exports. Falls in non-EU exports were led by drops in the same goods and commodities - mechanical and transport equipment, as well as oil exports.

The deficit

The overall trade deficit fell by £1.3bn to £23.7bn during September - fairly constant over the past nine months. In Q3, total UK goods imports rose by 2%, and UK goods exports rose by 3.2%. Imports of machinery and transport equipment from the EU fell by £1.7bn over the quarter and chemicals by £1.4bn over the same period. Total services imports and exports both rose by 3.3% in the same period. Trade in pensions, travel, intellectual property and insurance services remained strong in the third quarter.