UK export growth outperforms Germany and France

18 June 2017

- BDO Export Growth Index for UK at 104.4, Germany 103.3 and France 99.2 –

- UK services sector continues to perform well in international markets despite domestic slowdown–

UK export growth has outperformed both Germany and France for five consecutive quarters, according to the latest European Export Index by accountants and business advisers BDO LLP.

The Index – which tracks the export performance of the five largest European economies and the European Union on a quarterly basis – reveals that total UK exports are growing at a faster rate than exports in both Germany and France. The UK’s Export Index – which charts annual export growth – sits at 104.4, above the long-term trend of 100, but falling from 109.4 in the first quarter of 2017.

The UK has performed well in export markets since the devaluation of sterling and the more-recent pickup in the global economy. This is now the fifth consecutive quarter that the UK’s export performance growth has outperformed Germany and France.  German and French Export Indices sit at 103.3 and 99.2 respectively, up from 100.7 for Germany and down from 99.3 for France.

UK export growth has been driven by manufacturing in particular, with UK manufacturing exports increasing year-on-year, and strong recent order books indicated by surveys from the Confederation of British Industry (CBI). April saw UK manufacturing exports rise 1% month-on-month and 3% annually. Meanwhile, the UK’s food and drink exporters also saw an 8.3% annual increase in export value over Q1.

The UK’s strong Q1 export performance was in part driven by services exports, worth £63.7 bn during this period and has grown 8% year-on-year. However, with the current domestic slowdown in the services sector, the importance of a strong services export performance becomes even greater to the growth of the UK economy.

In contrast, while the UK currently leads Germany and France in export growth, German exports are recovering strongly and have grown 5.5% year-on-year. This quarter’s Export Growth Index for Germany indicates that the momentum will strengthen further, with year-on-year export growth of 8.1% expected over Q2.

While the UK’s services sector exports are expected to fall, Germany’s manufacturing sector, which is the largest of any nation in Europe, is benefiting from strong demand, potentially leading to Germany’s export growth overtaking the UK’s in the second half of 2017.

Commenting on the findings, Peter Hemington, Partner, BDO LLP, said: 

“UK exporters have significantly outperformed their EU counterparts since the referendum last year. They were quick to realise the opportunities the currency devaluation offered in the global marketplace. However, the future trading conditions for UK businesses are uncertain.  There is a new government in place, little clarity on the Brexit deal and a services sector that is grinding to a halt, UK exporting performance could quickly be overtaken by Germany and France.

The new government needs to reveal its position on Brexit immediately, so UK exporters and importers can best prepare for the changing trading conditions with the European Union and the rest of the world.”

To download BDO’s New Economy report and find out more visit www.neweconomy.bdo.co.uk

- Ends –

Overview of the BDO indices:

An overview of the Export Performance Indices are provided in the table below, detailing figures for the last four months quarters, to allow for comparison.
 

 

Country

Q2 2017

(figures for this report)

Q1

2017

Q4

2016

Q3

2016

BDO Export Growth Index

UK

104.4

109.4

107.9

103.3

Germany

103.3

100.7

98.2

94.9

France

99.2

99.3

99.9

93.5

Spain

100.6

107.0

99.0

94.9

Italy

106.7

109.3

99.4

96.5

BDO Export Price Growth Index

UK

117.8

125.2

128.2

119.2

Germany

114.0

109.8

97.8

89.1

France

105.7

119.7

96.1

80.8

Spain

100.7

99.7

88.4

88.4

Italy

93.1

89.1

89.3

90.6

 

Note to editors

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.

Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high growth businesses that fuel the economy.

We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed.

BDO LLP

BDO LLP operates in 18 offices across the UK, employing 3,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP has revenues of £405m and is the UK member firm of the BDO International network.

BDO International

The BDO International network provides business advisory services in 158 countries, with 68,000 people working out of 1,400 offices worldwide. It has revenues of $7.6bn.


Methodological notes

The BDO European Export Indices are prepared on behalf of BDO LLP by the Centre for Economics and Business Research ltd., a leading independent economics consultancy. Cebr has particular strengths in all forms of macroeconomic and market forecasting for the UK and European economies and in the use of business survey techniques.

The indices are calculated by combining a range of up-to-date business surveys and hard economic data, from a European and country-specific sources to ‘nowcast’ annual growth in the current quarter. Using surveyed data from sources including the European Commission, IFO, CBI, ISTAT & the Bank of England, as well as trade statistics from the UN and national statistical agencies, Cebr forecasts the level of annual growth in both total exports and export prices

The surveys and historic hard data are combined and correlated against a time series of trade data, individually for export growth and export price growth. Cebr then calculates the strength of the relationship between these variables and the dependent variable, respectively export growth and export price growth for each of the two indices. The variables are then weighted together based on their correlations and strength of relationship. Using this, Cebr nowcasts the current level of export prices and total value of exports in the current quarter. While there may be some data from months within the quarter of release, a nowcasting exercise is used to project whole quarter figures.

Once a quarterly figure has been calculated, the annual growth rate from the same quarter in the previous year is derived. Finally, the growth rate is scaled into an index with 100 as the average long-term growth trend of the country and 95 as the level dividing expansion from contraction.

The process is repeated for all of the five largest economies in Europe, and the combined European Union. As long-term growth, represented by a reading of 100 in the index, is calculated at a national level, a reading of 100 in two separate countries may represent a different level of annual growth.

The results are useful not only as snapshots of the current trends in the export markets of Europe’s largest economies, but also as indicators of turning points and leading indicators of growth.


Contacts

Alexander Dickie at Teneo Blue Rubicon on behalf of BDO LLP.

Mob: 07876 287318

Tel: 0207 260 2700

Email: bdo@teneobluerubicon.com