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.