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UK export growth slows, while European exporters flourish

25 June 2018

- UK export growth falls for a fifth consecutive quarter, creeping close to the point of contraction -

- European export growth accelerates due to stand out performance of Spanish and German exporters -

UK export growth is slowing while European exporters are starting to flourish again, according to the latest European Export Index by accountants and business advisers BDO LLP.

The latest findings from the quarterly index show that UK exports have fallen to their lowest level since Q1 of 2016, when uncertainty loomed ahead of the nation’s vote to leave the EU. The UK’s Export Growth Index, which charts annual growth in total exports, fell to 96.0 from 98.2 in the first quarter of 2018, creeping closer to the point of contraction (below 95.0), and plummeting 12.1 index points from this time last year.

The UK’s Export Inflation Index – which indicates the rate of year-on-year growth in export prices – has risen to 102.1 from 97.6 this quarter, suggesting that the price of UK exports is continuing to increase at pace. Uncertainty about Brexit continues to dampen the hopes of UK exporters, while rising prices are causing foreign customers to look elsewhere.  

By comparison, European export growth is accelerating. BDO’s Export Growth Index for the EU has risen to 99.8 in the second quarter of this year, up from 98.7 in Q1. The strong performance of the EU in the face of a developing global trade war demonstrates that its exporters are proving more resilient to the threat than originally feared.

Thriving European export growth is in part due to the solid performance of Spanish exporters. Spain’s Export Growth Index now sits at 100.3, rising above the long-term growth trend and up from 99.0 the previous quarter. This has been spurred by the improving performance of the Spanish economy, which grew 3.1% in 2017. Germany’s export growth has also been robust. Its Export Growth Index reached 100.0 in Q2, up from 99.4 the previous quarter. 

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

“The initial post-referendum boost UK exporters experienced following the fall in the value of sterling is starting to wear off.

It’s now been two years since the UK decided to leave the EU yet we’re still no clearer on exactly what our exit plan looks like. Hopefully as details of the final deal and the transition period become clearer, UK exporters will be able better to prepare and invest for their future.”

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

Q2 2018

(figures for this report)

Q1 2018

Q4

2017

Q3

2017

BDO Export Growth Index

EU

99.8

98.7

100.8

96.7

UK

96.0

98.2

100.6

107.9

Germany

100.0

99.4

102.9

102.4

France

98.7

99.3

99.8

101.2

Spain

100.3

99.0

102.9

103.0

Italy

98.2

98.2

102.4

101.0

BDO Export Inflation Index

EU

98.6

97.4

102.4

107.6

UK

102.1

97.6

98.9

104.0

Germany

103.2

98.9

103.0

105.4

France

102.2

90.2

108.7

104.0

Spain

107.2

109.6

103.9

98.5

Italy

102.4

107.4

106.4

105.0

 
 

Note to editors

Methodological notes 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 underlying revenues of £428m 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. 

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

Alexander Dickie at Teneo Blue Rubicon on behalf of BDO LLP

Mob: 07876 287318
Tel: 0207 260 2700
Email: [email protected]