The Lloyds Bank UK International Trade Index seeks to help UK companies become more successful, by providing them with insight into key challenges and opportunities when trading internationally. Based on the opinions and experiences of some 1,300 UK businesses, it’s produced in partnership with intelligence firm IHS Markit.
The UK remains the world’s tenth biggest exporter and its fifth biggest importer. Success when trading internationally in 2019 could be more important than ever for more UK businesses and the UK economy. Post-Brexit, the challenges for UK businesses trading internationally could be greater, but ultimately – so could the rewards. So, what can your business learn from the January 2019 edition of the index (Q4 2018)?
1. UK manufacturing export growth is slowing…
Although new export orders for UK manufacturers increased in Q4 2018, the rate of growth was slower and it was significantly less than when it peaked in Q3 2017. Until Q4 2018, UK manufacturing had experienced its longest period of export growth since 2008.
2. Global trade tensions and UK political uncertainty have damaged UK exports…
Together with automotive sector regulatory changes, they have helped to bring about the near stalling of export orders reported by many manufacturers in Q4 2018. Transport and “intermediate goods” (especially basic metals) were among the sectors worst affected.
3. Bigger firms are still more likely to export…
Larger firms with more diverse overseas export markets weathered the storm better than SMEs in Q4 2018. Although the number of UK companies exporting has increased consistently since the global financial crisis, the proportion of smaller companies exporting has reduced since the historic highs reached in early 2018.
4. Exports of consumer goods are holding up well…
In fact, they accelerated in Q4 2018. British exporters of consumer goods have performed better than expected for the past two years, partly fuelled by stronger labour market conditions and rising household incomes in emerging markets. There was solid growth in UK food, drink and leisure good export sales in Q4 2018, which suggests an ongoing opportunity for British exporters in 2019.
5. Exports of UK services are also falling…
UK service exports fell in Q4 2018 for the first time in four years. Reasons for a fall in demand from European clients were thought to include UK domestic political uncertainty and slower economic growth in the euro area. The finance and technology sub-sectors are strong exporters historically, however, these too declined in Q4 2018.