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You are here: News » Archived News » Exporting in uncertain times

Exporting in uncertain times

Exporting

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We have an election! However – most people have been caught off guard by the timing, everyone was expecting it to be in the second half of this year. The proroguing of Parliament on 30th May means that the country has no MPs for 5 weeks, however, Government still continues, but with restrictions. Government Ministers remain in post but are no longer MPs and of course many will be spending most of their time electioneering. For Civil Servants the pre-election restrictions mean that they must do everything possible not to do anything that could call their political impartiality into question. But the show will go on, and regardless of who wins the election or who are the next Ministers in the Department for Business and Trade, exporting will remain an integral part of business and National life.

CPTPP
The UK ratified the terms of the agreement to join the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership in May, earlier than expected. It also concluded a double taxation agreement with CPTPP member, Peru. Marco Forgione, the director general of the Institute of Export & International Trade, of which I am a member, said: “The ratification of CPTPP marks an important stage in the UK’s trading future. British businesses now have tariff-free access to some of fastest growing markets in the world to sell our goods and our world leading services. This is an opportunity which can help reshape the UK economy. At a time when global trade has been weaponised, this partnership can help the UK establish resilient and robust supply chains across Southeast Asia, Central and South America. In a world of growing geo-political uncertainty, the expanding trading community of CPTPP nations offers an important counterpoint.

“Now CPTPP is ratified the real work begins to make sure businesses understand how to take advantage of the immense opportunities for UK services and goods in CPTPP nations. There is a great opportunity for UK businesses to grow.”

The point Marco makes about the real work is crucial. Whilst the CPTPP includes several long-established substantial export markets: Australia, Canada, Japan, New Zealand, Singapore – there are now new opportunities to deepen the trade ties as can be seen from the Peru double taxation agreement. The CPTPP trading block is larger than the EU, and most importantly for the UK has a much stronger focus on Services than EU trade agreements have.

Exports are thriving
The UN Conference on Trade and Development ((UNCTAD) report that the UK had leapfrogged France, Japan and The Netherlands to move to 4th from the 7th largest global exporter, which is welcome news. And with exports reaching £864bn in 2023, the target of £1 trillion is looking achievable faster than the 2030 target. The rise in exports by 50% since 2016 outpaces inflation but masks three significant statistics:

  • Exports in services rose by 70% during the period from £276.2bn to £469.8bn
  • Contribution of services to exporting rose from 48% to 54%. This is a reflection of the UK economy that, whilst we are still 9th largest manufacturer in the world 81% of UK GDP is services. It also reflects that the UK is 2nd largest Services exporter in the world after the USA.
  • Exports took a significant dip in 2020 with the global effects of COVID. Services dipped by 8%, Goods by 15%; 12% overall.

There is a common perception that the strength of UK services exports is dependant on the Financial Services sector, this is wrong. Financial Services, whilst important only represents 16% of UK services exports. Exports in Goods took a bad hit during COVID and whilst also appear to have been hit by Brexit, have recovered strongly since 2020 with an increase of 26%.

Global headwinds
With over 20 wars or conflicts ongoing around the world including Ukraine, the Middle East (Gaza, Syria, Yemen), North Africa, East Africa, Myanmar, South America, we live in a dangerous world where there are inherent risks to trade. For the majority of exporters this is not a problem, most exports to Europe, North America, Asia are unaffected, but… The problems of the Houthis in Yemen attacking shipping has dramatically affected the Suez Canal with container ship volumes down by two thirds, with shipping diverted around the Cape of Good Hope and transits through the Panama Canal are halved due to dwindling water levels. There are also issues in the Black Sea.

All of these are causing additional costs and risk to international trade. My recommendation is to find the best advice possible. The DBT and your local Chamber of Commerce can help; my preference has always been to form a close relationship with a good freight forwarder who will be best able to help you with cost and risk mitigation.

I hope you have a great summer of Exporting!

Tony Goodman MBE
Tony Goodman MBE

Useful links:
gov.uk/exporting
Made in the UK, Sold to the World
export.org.uk
britishchambers.org.uk

Tony Goodman MBE is a successful exporter and has been doing so through a variety of different businesses. He is currently Marketing Advisor at Forest and Co who specialise in offering guidance on branding, exporting and sales: www.forestandco.com

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