A new EEF report has revealed that manufacturing exports are improving, leaving the UK better placed to take advantage of the global economic recovery.
A new report on export performance – ‘Re-thinking growth – the building blocks of an export recovery’ , published today by EEF, the manufacturers’ organisation, shows that manufacturers have been making good inroads into export markets.
However, EEF believes for exporters to continue to take advantage of recovering world markets trade support must be protected as part of any spending review by a new government.
The report comes on the back of the latest trade figures showing UK exporters saw a return to better form in February according to National Statistics, which should put an export-led economic recovery back on track. A rebound in sales meant that the value of exports of goods (excluding oil) was up by 6% in the latest three months compared with a year ago, while imports grew by 4.4%.
“Exporting has now become the lifeblood of UK manufacturers and we are now seeing more signs of an export – led recovery,” says EEF Director of Policy, Steve Radley. “But exporting is a team game requiring ambition for manufacturers, a collaborative approach from banks to provide the finance, the right foreign exchange risk management tools and world class export support services.
“The foundations are there, but if we are to rebalance the economy the next government must build on these and not turn off the funding tap for essential trade support services.”
According to the survey, more than 90% of manufacturers are involved in exporting. The survey also shows that manufacturers rely heavily on overseas markets with over 40% of companies deriving more than half their turnover from exports. Furthermore, over the past four years further progress has been made in tapping into new, emerging market opportunities, especially in the Middle East and Asia, with even the smallest companies making progress into overseas markets.
Looking forward, the long term ambition for the vast majority of manufacturers (80%) is to continue to extend their reach into new export markets. This is critical given that many of our traditional markets in Europe are grappling with many of the same economic problems as Britain and are likely to grow slowly.
Exposure to a diversity of export markets cushioned the blow of the global recession for some manufacturers. Despite very tough trading conditions, half of manufacturers expanded their exports in the previous 12 months and around a fifth increased them by more than 10%.
Firms selling in to a wider range of markets tended to do much better. Just over two fifths (43%) of firms exporting to nine markets or more showed an increase in sales compared with just over a quarter (26%) of those selling to one to four markets.
More than half of companies have responded to the changed economic environment by rethinking their export strategy. Despite this, a number of hurdles stand in the way of them taking full advantage of a recovery in global markets, particularly uncertainty around exchange rates and recent Sterling volatility.
In addition, problems remain with insurance cover. In response, EEF is urging the Banks to work more closely with exporters to make sure insurance, other foreign exchange products and tools are available that cater for a broader range of exporter – not just the largest.