As businesses across Britain gather in London to discuss opportunities for export growth, a report from the British Chambers of Commerce (BCC) and DHL reveals a drop in both export growth and confidence among UK exporters.
Export sales (+7) and orders (+3) balances have fallen to their lowest levels in over six years, according to the latest Quarterly International Trade Outlook.
While export orders have remained constant for just over half (54%) of UK businesses, and 50% report that export sales have remained the same as in the previous quarter, both have fallen to their lowest level since Q2 2009.
The latest quarterly report coincides with the BCC International Trade Conference in London today (Tuesday), which focuses on providing UK businesses with practical support and guidance to identify and break into high-growth markets overseas.
The report also finds that confidence in expectations over turnover and profitability have worsened, with 13% reporting that they expect a fall in turnover (from 7% in Q2), and 16% expecting a fall in profits (from 11%).
The key findings from the report are:
· The Trade Confidence Index, a measure of the volume of trade documentation issued nationally and business’ confidence, fell by 4.6% on Q2 2015, and by 1.2% on Q3 2014 - the index now stands at 115.53
· Scotland was the only part of the UK to see an increase in quarter-on-quarter trade performance (+2.2%) - the biggest declines were in Wales (-13.3%), London (-7.8%), and Northern Ireland (-7.4%).
· The export sales (+7) and orders balances (+3) have fallen to their lowest levels since Q2 2009, in part due to economic uncertainty around emerging markets and ongoing problems in the Eurozone.
· The number of businesses operating at full capacity rose from 34% in Q2 to 39% in Q3
· 50% of businesses report export sales have remained constant, 21% report a decrease (up from 15% in Q2).
· 54% of businesses report export orders have remained constant, 22% report a decrease (up from 17% in Q2).
· 13% of exporters say that they have seen a decrease in investment in plant and machinery during the previous quarter.
John Longworth, Director General of the British Chambers of Commerce, said:
“Driving export growth is key to reducing the UK’s deficit and maintaining our global competitiveness. These figures make it clear that the UK’s export drive is at risk of going into reverse gear, precisely at the time when it needs to be moving forward.
“Many firms are currently operating at capacity and are in need of support to invest in machinery or staff. Those businesses considering taking the leap and breaking into new markets desperately need access to the growth funding and working capital to enable this transformation.
“Success in export is all about having the right market information, and the right fundamentals – access to finance, a skilled workforce and good infrastructure connections.
“Smaller businesses also need practical help and advice to give them an edge over their global competition. That’s why we are building a Global Business Network to help UK companies take their first steps into new markets, with business-to-business help with the real-world challenges that exporting can generate.”
Phil Couchman, CEO, DHL Express UK, said:
“We can mostly attribute the drop in export orders and sales to uncertainty in the Eurozone, and the instability of the Chinese and wider global economy. Despite these factors, we must remember that UK businesses are resoundingly resilient. Whilst the overall index has fallen, over half of businesses say export orders have remained constant – and half say export sales have too.
“We would encourage businesses not to let the latest figures knock their confidence in the export market. There is enduring high demand for British products across the globe and businesses should capitalise on the opportunities this demand brings.
“Whilst the movement in currency represents a challenge for many exporters, DHL remains confident in the underlying UK export market and will continue to support UK SMEs in expanding their businesses internationally, to help them to reach their full potential in the global marketplace.”