UK export growth wanes as pound strengthens

25-Jun-2018 - Last updated on 25-Jun-2018 at 11:49 GMT

UK export growth fell in the first quarter of 2018

Spain’s food export trade could give the UK a run for its money, as a business consultancy report reveals the UK’s overall international sales growth is flagging, while Spain’s growth has overtaken it.

UK food and drink exports grew by 5.5% to £5.2bn in the first quarter of 2018, according to the Food and Drink Federation, while beef exports shot up by 18.2% to £21.1m. However, BDO has just released a report finding Spain – whose largest net exports include meat, fruits and vegetables – recorded the highest export index score in the first quarter of 2018, rising to 105.1 from 102.9.

The country’s overall exports increased at a rate of 8% year-on-year for the past three quarters, but BDO claimed the increase suggested even faster growth was expected.

Meanwhile, BDO’s UK Export Growth Index, which charted annual growth in total exports, fell to 99.9 from 100.6 in the previous quarter, putting the UK behind Germany and Spain.

Less appealing to buyers

According to BDO, the 3.7% year-on-year rise in the value of the pound was making UK exports less appealing to foreign buyers, as high inflationary pressures forced producers to push prices up. This, in turn, had pressured overseas buyers to turn to alternative markets, a trend set to continue.

Since the second quarter of 2017, the UK’s export growth has slowed from 108.1 to 99.1 – behind European export growth, which looked set to accelerate in 2018, according to BDO. Its report found European export growth had climbed 2.7 points to 103.5 since the last quarter of 2017.

Commenting on the findings, 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.

‘Still no clarity’

“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, food and drink manufacturers have been asked to submit evidence to a parliamentary enquiry on the future of dairy exports.