In an EEF blog released today by Felicity Burch, growth in UK exports to markets outside of Europe is pinpointed as a reason to be optimistic, despite the widening trade deficit.
The report comes after the Office for National Statistics (ONS) released a report this morning showing a widening deficit on trade in goods. The deficit rose from £8.6 billion in August, to £9.8 billion in September.
The figure makes September’s deficit the highest on record since the series started in 1998.
Total goods imports surged by £1.2bn while exports only rose by £0.1 bn. It is hard to tell how the figures from the ONS read for UK manufacturers, but what is clear is that manufacturing typically makes up around 50% of UK exports.
However small the rise, the ONS figures could potentially be a positive for UK manufacturers.
In the short term, Burch predicts that the Eurozone crisis will continue to hurt the UK economy, but is more optimistic for the long term.
Despite a marginal month-on-month fall in UK exports outside of the EU, Burch looks at the overall picture and suggests that this is still an area for UK businesses to exploit.
In her analysis, she states: “in the last five years UK exporters have been developing and expanding in a wide range of new markets from Eastern Europe, to the Middle East and Asia.”
Burch points to figures from the HM Revenue & Customs showing export growth of 14% to Europe between 2005-2010, but figures of over 100% to the BRIC economies (Brazil, Russia, India and China) over the same period. Although the data includes the years either side of the 2008 recession, the opportunity for export growth in these markets remains.
In her blog she notes: “There is evidence post-recession that this trend is continuing. Exports to the BRIC economies were 44% higher in 2011 Q2 than 2009 Q4. These four countries alone have accounted for 14% of export growth since the recession ended.”
“‘Today’s figures give us reason to believe this growth is set to continue, for example they show that the UK’s exports of cars to markets outside of the EU are growing strongly,” she added.