Exporters struggle to make headway as EU trade talks begin

Exporters continued to tread water in the final quarter of 2019, according the latest international trade survey from the British Chambers of Commerce.

Manufacturing export orders weakened for a second consecutive quarter while service sector exports were static at historically low levels.

The report comes as the UK begins negotiating a new trading relationship with the EU with ministers making it clear trade friction will be “inevitable”.

Yet exporters are making slow progress in targeting new markets. Trade documents issued by Chambers of Commerce for goods shipments outside the EU were only 0.2% higher than a year ago.

Rob Johnston, Chief Executive of Cumbria Chamber of Commerce, said: “The indicators for export orders and sales, in manufacturing and services, declined sharply in 2019 and remain significantly lower than the previous year.

“We may have greater political certainty at Westminster but this must translate into clarity on the future trading relationship with the EU.

“Getting a strong trade deal, backing exporters and taking action to cut the high cost of doing business in the UK must be top of the agenda. With the right conditions, exporters can provide a shot in the arm for the economy.

“There certainly is potential in fast-growing emerging economies outside the EU. For example, the British Chambers of Commerce has identified Ghana, Nigeria and Egypt as three export markets with strong potential.”

The British Chambers’ Quarterly International Trade Outlook, conducted in partnership with DHL Express, is the UK’s largest independent survey of exporters based on responses from 3,300 businesses.

Results are presented as balance figures – the percentage of firms that report an increase less the percentage that report a decrease. A positive figure indicates expansion of activity and a negative figure contraction.

The balance of manufacturers reporting an increase in export orders fell to -2 while for service businesses the balance was unchanged at zero.

Manufacturers reporting improved cashflow, a key indicator of business performance, improved to +2, from a low of -9 in Q3, but the figure remains historically weak. A year ago, in Q4 2018, it stood at +9.

Exchange rate volatility remains the top concern for manufacturing exporters, cited by 64% of those surveyed.

The British Chambers forecasts that UK exports will grow by 1.1% this year and by 1.4% in 2021.