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UK export growth crumbles amidst chaotic EU

17 December 2018

  • UK export growth collapses to lowest point since Q4 2015 amidst significant economic turmoil across Europe 

UK export growth has collapsed to its lowest point since 2015 amidst economic turmoil across Europe, according to the latest European Export Index by accountants and business advisers BDO LLP

The latest findings from the quarterly index show that UK export growth has continued to trend downwards since its peak in Q1 2017 and is now below the point of contraction of 95.0. BDO’s EU Export Growth Index shows that the growth of UK exports has fallen by 0.7 points to stand at 94.9 in Q4 2018. 

The UK is not the only major economy impacted by EU headwinds. German car manufacturers have struggled to meet new emissions standards, which has played a key part in a drop in export growth of 2.6 points to stand at 96.8 in Q4. Meanwhile France - the worst performing major EU economy this quarter – saw its export growth collapse by 4.8 points to 92.8. It is expected that the French economy will fall further as the country contends with widespread protests that are suppressing economic activity. 

Many countries in Europe continue to be impacted by political uncertainty and a drop in demand which is driven by a slowdown in economic growth in China and the US. Taking the economic bloc as a whole, the EU Export Growth index increased by just 0.1 to stand at 99.8 in Q4. 

Some countries do remain resilient however. Spain was the only country to see an improvement in Q4, with the export growth index rising to 99.1 in Q4 from 98.3 in Q3. Despite the Italian government having a major disagreement with the European Commission over its budget, this has not yet impacted the economy and Italian export growth has remained broadly stable, edging down by just 0.1 points to stand at 100.01 in Q4. 

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

“Across Europe, economic disorder has led to EU export growth stagnating. Three of the five largest EU economies are battling against political and economic chaos. The French economy is set to suffer further from the gilet jaunes protests, Germany’s car manufacturers are struggling with new regulation and, in the UK, government infighting is taking its toll as we edge closer to a disorderly Brexit.

“Overseas demand has helped sustain the UK economy over the last few years and British businesses are doing all they can to remain resilient despite these challenges. The EU remains our most important trading block but Brexit uncertainty is proving damaging. The government must consider the needs of business. It’s crucial that Britain is seen to be open for business with the EU and other key markets as we enter what is going to be a critical year for the UK.” 

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 quarters, to allow for comparison. 

 

Country

Q4 2018

(figures for this report)

Q3 2018

 

Q2 2018

Q1 2018

Q4 2017

BDO Export Growth Index

EU

99.8

99.7

99.8

98.7

100.8

UK

94.9

95.6

97.6

98.7

100.6

Germany

96.8

99.4

98.9

99.4

102.9

France

92.8

97.6

98.9

99.1

99.8

Spain

99.1

98.3

97.1

98.9

102.9

Italy

100.1

100.2

98.9

98.2

102.4

BDO Export Inflation Index

EU

108.1

108.7

108.8

96.9

102.4

UK

100.2

102.7

100.1

97.6

98.9

Germany

99.4

100.8

103.1

98.9

103.0

France

109.9

112.9

108.5

90.2

108.7

Spain

114.7

108.8

116.7

109.6

103.9

Italy

100.4

101.6

101.7

107.4

106.4

 

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 16 offices across the UK, employing 3,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP has underlying revenues of £464m and is the UK member firm of the BDO International network.
 

BDO International

The BDO International network provides business advisory services in 162 countries, with 80,000 people working out of 1,500 offices worldwide. It has revenues of $9bn.
 

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. Long-term growth, represented by a reading of 100 in the index, is calculated at a EU level for exports and at a national level for export prices. 
 
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  

Paul Wyatt at Teneo on behalf  of BDO LLP

Mob: 07850656712
Tel: 0207 260 2700
Email: [email protected]