UK exports fall as the pound’s value rises

19-Mar-2018 - Last updated on 19-Mar-2018 at 10:58 GMT

UK exports are set to fall as the value of the pound rises

UK exports have fallen in the first quarter of this year, as the rising value of the pound made British products less desirable overseas, according to a report from the business consultancy BDO.

The UK’s Export Growth Index, which charts annual growth in total exports, fell to 99.9 from 100.6 in the previous quarter.

It indicated that the increasing value of the pound, which was up by 3.7% year-on-year, was likely making UK exports less appealing to foreign buyers as high inflationary pressures have forced producers to push prices up.

Overseas buyers have turned to alternative markets, a trend that was set to continue, claimed BDO.

Turned to alternative markets

The group also found that the year-on-year growth in exports prices had fallen in all European countries except the UK. BDO found that the UK's Export Inflation Index rose to 104.6 from 98.9.

However, while the UK slipped behind, the rest of Europe's export growth was set to accelerate in 2018. BDO's Export Growth Index for Europe climbed 2.7 points from the last quarter of 2017, reaching 103.5.

Germany and Spain came out on top as the top performing exporters among the EU's largest economies, according to BDO.

Spain – whose largest net exports included fruits, vegetables and meat – recorded the highest index score in the first quarter of 2018, rising to 105.1 from 102.9. Its exports increased at a rate of 8% year-on-year for the past three quarters.

Faster growth

German exporters were also set to experience faster growth, as its Export Growth Index climbed to 104.6 in the first quarter of this year, 1.7 points above the 102.9 registered in the final quarter of 2017.

Commenting on the results, BDO partner Peter Hemington said: “While we’re seeing a strong performance from exporters across Europe because of the continuously improving global economic outlook, the UK falling to the back of the pack is something of a warning sign for government.

“Considering it’s been almost a year since Article 50 was triggered and there is still no clarity on trade deals or Brexit tariffs, the government needs to reveal its position immediately so UK businesses can prepare for future trading conditions and ensure Britain remains a key player in international markets.”

Meanwhile, Scottish food and drink exports were worth approximately £6bn in 2017 – almost £570m more than in 2016 – the Scottish Government revealed.