n International Trade

Export growth stagnant but firms eye

overseas markets for future growth

The county of Kent is renowned for its exporting expertise, with many companies based there managing to trade successfully in overseas markets.

Sustained export growth should be powering our economic recovery from the pandemic. Chambers and their members are already working hard to increase exports but need more substantive measures from government now.

However, it has been a tough time for exporters. A survey of more than 2,700 UK exporters has revealed that export sales growth has been effectively stagnant for the past year. The British Chambers of Commerce’s quarterly Trade Confidence Outlook showed that the proportion of exporters reporting increased overseas sales was unchanged from Q4 at 29%, while those reporting a decrease rose one point to 25%.

The data showed that manufacturers were more likely to report increased export sales than either business-to-business (B2B) service firms (such as lawyers or accountants) or business-toconsumer (B2C) service firms (such as online clothing stores).

Conversely, though, B2B service exporters were more likely than either manufacturers or B2C service exporters to expect profitability to increase in the coming year.

Responding to the findings, William Bain, head of trade policy at the British Chambers of Commerce, said: “This data confirms our concerns – that for the last year there was a broadly flat picture for UK exports. This is in contrast with the performance of our near neighbours, with Germany’s exports both within and outside the Single Market steaming ahead by double-digit margins and with trade losses from the pandemic already effectively recovered.

“UK exporters are facing the headwinds of higher red tape costs from trading with the EU, raised raw material pressures, and ongoing issues in global shipping markets. If we are to realise the aspirations of the UK government’s Export Strategy then 2022 has to be the year where these structural factors holding back our exporters are addressed.

“Sustained export growth should be powering our economic recovery from the pandemic. Chambers and their members are already working hard to increase exports but need more substantive measures from government now.”

Another survey has also pinpointed international markets as a key driver of future growth for companies.

A quarterly survey of more than a thousand companies that trade overseas showed that 37 per cent named international markets as sources of growth, compared with only 34 per cent citing the UK market. It’s the first time since the Santander UK trade barometer research began in 2017 that overseas markets have trumped the domestic market as the main driver for company growth.

A quarter of the companies said that they were now selling more in international markets than before Brexit on January 1, 2021, up from only 17 per cent previously.

In separate news, the BCC has called for Swiss trade negotiations to build a better deal for Kent firms that trade in this market.

Responding to plans for negotiations on a new trade agreement with Switzerland, William Bain said: “Businesses will welcome the call for input into these new Swiss-UK negotiations getting underway later this year.

“Switzerland is the UK’s tenth largest trading partner with a relationship worth £34.5bn in total trade in 2020. The trade surplus the UK had with Switzerland in 2020 was more than £14bn.

“We would urge negotiators not to dislodge the current provisions on rules of origin – these are highly important for UK supply and manufacturing supply chains.

“There are also opportunities to secure bespoke arrangements on digital trade, green trade and an SME chapter within a revised trade agreement.

“London, the south east and east of England already have especially strong export links to Switzerland. We look forward to sharing our ideas with government on a bespoke, ambitious trade agreement with Switzerland which boosts our exports right across the UK.”

Switzerland is the UK’s fifth largest export market for services, amounting to 4.1% of the UK’s entire services exports per year. Particular UK export strengths to the Swiss market are in business, financial, telecommunications and transport services.

Existing Swiss-UK trading terms do not cover services market access issues and the Services Mobility Agreement in force is limited to only 90-day stays for work purposes without a work permit.

The UK government is holding an eight-week public consultation on the negotiations. The new agreement will replace the continuity trade agreement reached by the two countries prior to the UK’s exit from the EU.