EU export growth slumps as Brexit stockpiling “hangover” sets in

01 July 2019

  • EU export growth falls to its lowest level since Q3 2017
  • Germany measures its weakest export growth in six years
  • UK export price growth enters negative territory for the first time since 2016

EU export growth slumped considerably between the first and second quarters of 2019, hitting its lowest level in almost two years, according to new research from accountancy and business advisory firm BDO LLP.

Sliding from 99.1 to 97.2 in Q2 2019, the BDO Export Growth Index, which provides snapshots of the export markets in Europe’s five largest economies, recorded a seven-quarter low.

For the first time since Q3 2017, the UK’s export growth index (99.2) simultaneously exceeded that of France (98.0), Italy (97.0), Spain (95.5) and Germany (93.1). However, Spain was the only country not to experience a decline in the last quarter, and all of the indices are now below the long-run growth trend for each country (100).  

Germany - the EU’s largest economy and exporter - saw the index fall into contraction for the first time since 2016, slipping 4.5 points to 93.1. This is the weakest the index has been since Q3 2013 in the aftermath of the Eurozone crisis.

Industrial output in Germany contracted by 2.3% in April, the sharpest monthly decline in almost four years. This is thought to be due in part to the “hangover” effect from the pre-Brexit stockpiling witnessed in Q1 which artificially inflated growth, as the UK purchases more goods from Germany than it does from any other country, including the US and China.

The BDO Export Inflation Index dipped to a 12-month low of 100.2 in Q2 2019, mirroring declines in the inflation indices for all five economies assessed.

UK inflation fell from 99.6 to 94.9, with British export price growth entering negative territory for the first time since the start of 2016.

The EU currently purchases more than half of the UK’s total goods exports, meaning that UK export prices as a whole will be significantly impacted by the outcome of Brexit, which could potentially result in the imposition of tariffs across the channel. The UK is also a major purchaser of European goods, meaning that post-Brexit tariffs could affect overall export prices for the rest of the EU.

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

“Industrial production in the Eurozone has contracted for two consecutive months, suggesting that the slowing growth in key markets, an escalation of global trade tensions, as well as the winding down of pre-Brexit stockpiling have dampened activity.

“One of the biggest developments in the global economy over the past year has been the intensification of trade tensions between the US and China. However, this dispute may present future opportunities for Europe. China’s imposition of tariffs on $110bn worth of US goods is likely to mean some Chinese firms will substitute US for European products, providing a boon for EU exporters. Europe’s automotive, aircraft and semiconductor industries could fare particularly well from this.”

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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.


Q2 2019

(figures for this report)

Q1 2019 Q4 2018 Q3 2018
BDO Export Growth Index EU 97.2 99.1 99.7 99.7
UK 99.2 101.2 98.8 95.6
Germany 93.1 97.6 96.5 98
France 98 101.6 99.2 97.6
Spain 95.5 93.9 95.7 98.3
Italy 97 97.2 97.9 97.9
BDO Export Inflation Index EU 100.2 105.1 108.9 108.8
UK 94.9 99.6 103.8 100.1
Germany 100.5 102.9 105.7 103.1
France 101.4 105 106 108.5
Spain 96 105.5 113 116.7
Italy 101.1 101.1 102.5 101.7

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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.


Paul Wyatt
at Teneo on behalf of BDO LLP
Mob: 07850656712
Tel: 0207 260 2700
Email: [email protected]