UK export growth is outperforming Europe’s other large economies, hitting a nine-month high in our latest European Export Index. The drop in the value of sterling continues to act as a stimulus for UK exports but will confidence falter as Brexit negotiations develop?
The UK’s Export Growth Index – which charts annual growth in total exports – has risen to 110.3 for the fourth quarter of this year, up from 107.9 the previous quarter. The latest reading marks a nine-month high for UK export growth, which is now well above the long-term growth rate of 100.
In comparison with Europe’s other leading economies, the UK is on course to record the fastest rate of growth for its total exports. In France and Italy, export growth is set to accelerate. However, a slight slowdown is expected in Germany and Spain, which have both recorded falls in their respective export indices in the latest analysis. Despite the mixed forecasts, all the economies are set to see above average export growth in the fourth quarter.
Demand for UK exports in particular has been rising above the long-term trend ever since the British public voted to leave the European Union in June last year. The country’s exporters have been able to take advantage of the more competitive prices they can offer customers as a result of the fall in the value of sterling.
Due to the rising demand, UK exporters are becoming increasingly confident in the short term. However, this confidence could quickly disappear as Brexit negotiations continue and a clearer picture develops about our future trade agreements.
The government needs to ensure open and simple access to the global markets otherwise it risks the growth of our exporters in the longer term.
For more information, download the Q4 2017 European Export Index.
Peter Hemington, Partner at BDO.