One of the early repercussions of last year’s EU referendum result was a dramatic drop in the value of sterling which, in turn, acted as a stimulus for UK exports.  In simple terms, UK goods became cheaper so we sold more of them in other markets.

Our latest European Export Index points to a different story emerging.  Germany’s export growth rate has overtaken the UK’s for the first time in 18 months and UK growth is slowing (albeit from a very strong point).

Germany’s Export Growth Index – which charts annual growth in total exports – has risen to 106.6 in the third quarter of this year, up from 101.6 in the previous quarter. The marked increase is attributed to the strong performance of Germany’s industrial firms, with export expectations at their highest in over six years following rising demand from the US for German industrial products. Spain’s exporting growth has also been robust. Its Export Growth Index sits at 103.6 for the second quarter running, well above the long-term growth trend.

In comparison, the UK’s export growth rate is starting to slow down. Our Export Growth Index fell from 104.8 to 101.5 in the third quarter of 2017. Previously the UK’s strong performance was spurred by the pickup in the global economy and, as already flagged, the fall in the value of sterling. However, as pressures from the UK economy’s high inflation push the price of products up, international markets are beginning to look elsewhere.

By no means is it all doom and gloom.  Far from it.  It’s important to remember that UK exports continue to grow and they continue to outperform the EU.  The EU Export Growth Index rose 5.4 points this quarter to 98.6. The rise signals a return to growth for the EU but the figure still falls under 100, indicating a rate of growth which is slower than the long-term growth trend for the EU.

So, in summary, the post-referendum lift experienced by UK exporters is starting to wane as the high rate of inflation causes an increase in the price of products. German exporters are therefore better placed to take advantage of the renewed demand coming from across the Atlantic and it leaves UK exporters in a vulnerable position.  However, for now, UK exports continue to grow and outpace EU export growth as a whole.


Peter Hemington is Partner and Head of Corporate Finance at BDO

“Germany’s export growth rate has overtaken the UK’s for the first time in 18 months and UK growth is slowing. “

Peter Hemington, Partner and Head of Corporate Finance, BDO

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