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NOVEMBER 2018
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Business Lesson
goods and services rose to £620.2billion.
This constitutes a record high. An
increased demand for manufactured
goods boosted goods exports by 10 per
cent on the previous year, while services
exports increased by 4.2 per cent. It
was also announced that the trade
deficit has continued to narrow, down
by £7.7billion to £23.1billion. In the
view of International Trade Secretary
Dr Liam Fox, this shows that "far from
the negative forecasts after the EU
referendum, there is every reason to be
optimistic [about UK trade]".
So buoyed were the government
by these figures that Fox has now
pledged to transform the UK into a
‘21st-century exporting superpower’.
His claim has been met with a healthy
dose of scepticism from many, but the
government vowed their new export
strategy could boost total exports to
35 per cent as a proportion of GDP. If
successful, this would create jobs, raise
wages and grow the UK’s economy.
But, given that for decades the UK’s
biggest international business partner has
been the European Union, can post-Brexit
Britain really rely on exports to grow the
economy? Currently, half of the goods
the UK exports each year are destined for
fellow EU countries. The impact that Brexit
will have on the UK’s trading relationship
with the EU is as yet unclear. It is however
more than likely to include the UK exiting
both the single European market and the
customs union. This means that British
businesses exporting to the EUmay soon
be faced with potentially-prohibitive
administrative, financial and legal barriers.
If a so-called “hard” Brexit comes
to fruition, which at this point seems
most likely, UK SMEs' existing EU
CAN POST- BREXI T BR I TA IN RELY ON
EXPORTS? LEADING TRADE EXPERT
SIDDHARTH SHANKAR CONSIDERS
THE UK ’ S ECONOMIC OUTLOOK
trading partners will become too
expensive to trade with. The financial
advantage that currently exists in
trading with EU countries because they
are in such close proximity to the UK
would disappear after taxation and legal
formalities.
The UK’s export strategy needs to
shift its focus away from the EU if the
government is going to make good on
its claim. Currently, there is a huge gap
in the market between demand and
supply for UK products in the non-EU
market. However, as shown, the UK’s
export figures are already getting closer
to its import figures – which is having
a positive impact on the trade deficit.
At some point in the future, there is the
potential for the export figure to non-EU
countries to increase, if a proper strategy
is put in place by the UK government.
The figures regarding the trade
deficit are mainly due to decreasing
exports of oil products and increasing
imports within the same category. This is
something that will happen anyway, with
or without an EU deal, due to the natural
decrease in the yield from oil fields as
A risky
business
he final countdown to Brexit
is well and truly underway
and the likelihood that the
EU and the UK will fail
to reach a deal before the
deadline hits seems to only be increasing.
It’s understandable why many of the UK’s
most high-profile figures, from politicians
to journalists to business leaders, are
proffering gloomy forecasts for the UK’s
economic outlook post-Brexit.
However, one bright spot on the
horizon has been exports. The most
recent figures from the Department
of International Trade show that in
the year to March 2018, exports of UK
T