Economist Dr Huw Edwards picks apart the Government’s rhetorical vision of global export dominance and reveals a much more challenging future…
International Trade Secretary Liam Fox stood at a podium with the message ‘Exporting is great’ yesterday as he proposed Britain could be a "21st century exporting superpower" – but the reality is less dramatic.
The Tory cabinet minister was selling the Government’s Export Strategy and promised a future with better use of the UK's overseas network, new online tools and bolstering business networks.
However, in contrast to this optimistic future, the challenge has become much harder, not easier, following the Brexit vote.
While the government is keen to present a bullish picture of exports ‘at a record high’ and ‘an increase of 4.4% on a year ago’, the reality is that in terms of the foreign currency needed to purchase our imports, UK exports have done very poorly since the Brexit vote.
This is because sterling fell by around 10-15% against the dollar and euro following the Brexit vote, and remains at this low level.
Even though British firms are effectively discounting hard in export markets, they are still finding almost no extra buyers.
In fact, research suggests the number of firms entering into export markets is 5% lower than we would have expected pre-vote.
When we take account that firms are also selling less (in dollar terms), the gap is even bigger.
Our own research at Loughborough, Aston and Warwick indicates that, correcting for the growth of markets, we are selling around 13% less (measured in foreign currency) than we would have expected before the vote.
The primary cause seems to be increased uncertainty and a loss of confidence by exporters.
It is good that the UK government is reviewing and looking at improving its export promotion measures.
We have to hope that in its policy on trade agreements (including with the EU) it does not shoot itself in the foot by making the current bad situation worse.
Notes for editors
Press release reference number: 18/118
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