UK exports are weakening and will continue to be affected by the credit crunch, according to new research from Euler Hermes UK.
New data reveals a mixed view of last year, with the first half of 2007 seeing strong rates of growth recorded in 2006 continuing to be sustained.
However the credit crisis in mid 2007 led to a slowdown in key export markets in Europe, resulting in a 'sluggish trend' in exports by the end of the year.
The research found that the Eurozone, which accounts for around 44% of UK export trade, expanded at its slowest rate since August 2005.
The US market accounts for around 16% of the UK's exports. Fears of recession are continuing to unsettle this market, and data from the Institute of Supply Management has revealed that the US manufacturing sector contracted in December.
However, the emerging markets are continuing to demonstrate strong growth, with the Bric nations India, China, Russia and Brazil continuing to drive the global economy.
Yet, these countries only account for around 4% of overall UK exports and demand in these regions is unable to fully absorb UK exports that are failing in the more subdued markets in Europe and the US.
The Euler Hermes report highlights the weakening sterling recorded during December as a positive trend for UK exporters, making UK exports cheaper abroad.
Yet, Fabrice Desnos, chief executive officer at Euler Hermes comments: "Whilst emerging markets are still dynamic and the weaker pound provides support to the competitiveness of UK exports, these factors are insufficient to offset reduced demand from US and Europe.”
Euler Hermes has based its research on the its monthly purchasing managers' index (PMI) surveys conducted by NTC Economics.
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