The British Chambers of Commerce have published their Trade Confidence Index, showing slowing growth among exporters.
The DHL/BCC Trade Confidence Index released today shows modest growth among exporters in Quarter 3 of 2011. Trade documentation data for UK goods exports in Q3 2011 shows a 3% increase on the same quarter last year, and 3% on the previous quarter demonstrating growth in export goods continued. However, weakening order books illustrate a slowing of growth towards the end of the year, while plans for expansion are also weak. A fifth of surveyed firms reported plans to decrease their workforce, and 24% of firms believed profitability would worsen over the coming year.
The Government has repeatedly stated the need for a restructuring of the British economy, from domestic consumption to exports. The flattened UK consumer market, exacerbated by unemployment, wage freezes and price inflation, has led policymakers to place increasing emphasis on exports as an area to generate growth. Indeed, the Chambers of Commerce network believe International Trade is an essential aspect of Britain’s recovery, and have repeatedly pressed Government to support British exporters.
However, as has been illustrated over recent weeks, economic uncertainty is not limited to Britain. The protracted debt crisis and continued austerity measures in the Eurozone, and a debt ceiling crisis in the United States this year, have meant depressed markets in the UK’s two main export destinations. This has meant that exporters have faced increasing difficulties selling their products and services abroad. Exporters must look to perhaps less familiar destinations, the high growth BRIC economies of Brazil, Russia, India and China for example. However, establishing business in new markets is time consuming, difficult and often expensive, and can involve adapting existing products and services or developing entirely new lines. Given these difficulties it is essential that exporters receive the necessary support from Government.
The British Chambers of Commerce (BCC) have called on Government to better suit the services provided by UK Trade and Investment to the needs of small and medium sized enterprises. The Government must also do more to provide state-backed trade finance and export credit insurance, particularly to SMEs. BCC research shows that British companies suffered from “a structural disadvantage when attempting to access state-backed trade finance and insurance support for high-value high-growth developing markets, considered by the private insurance market as too risky."
Commenting on the results of the index, John Longworth, Director General of the British Chambers of Commerce, said:
“There are some great examples of British small- and medium-sized businesses exporting goods and services across the globe, but we need more of them, and that relies on more support and trade finance. If we’re to see the rebalancing of the economy that we need for recovery, British businesses must be encouraged to take risks and seek out new markets, particularly those outside Europe. The Chancellor must use his Autumn Statement to deliver confidence to exporters, and encourage those looking to trade abroad for the first time to take the leap.”
Samuel Lewis, Policy Correspondent at Mid Yorkshire Chamber of Commerce