UK exports will grow more than trade from any other European country this year, according to research from Euler Hermes.
In its latest Global Trade report, the trade credit insurance provider says it expects the UK to record a US$25bn rise in the value of goods and services sold overseas in 2020, more than the Netherlands (US$21bn), Germany (US$18bn), Belgium (US$16bn), France (US$11bn), Spain (US$10bn), Switzerland (US$10bn) and Italy (US$10bn).
Only China, the US and Canada will record bigger increases, at US$90bn, US$87bn and US$35bn respectively, the research says.
The report goes on to say that the software and IT services, agri-food and chemicals sectors will be the main contributors to the year-on-year growth.
While the headline figure of a US$25bn increase looks good at first glance, this comes following a US$29bn contraction in 2019 as a result of the uncertainty surrounding Brexit, and so still represents a decrease in value terms from the 2018 baseline. Euler Hermes also cautions that the uptick comes in part due to an expected appreciation of sterling with respect to the US dollar.
Nonetheless, Ana Boata, senior European economist at Euler Hermes, says that “the worst is behind us”, adding: “We expect the UK to experience a strong rebound in export growth this year as the promise of a deal with the EU lowers the levels of uncertainty for both UK businesses and their customers overseas.”
Euler Hermes’ figures are based on the UK leaving the EU under terms agreed in the current deal, which – with just nine days to go until the country leaves the bloc – seems likely.
However, if the UK is to reach its full trading potential post-Brexit, its trade policy must focus more on its smaller exporters, says L. Alan Winters, professor of economics and director of the UK Trade Policy Observatory at the University of Sussex. “If the UK economy is to take advantage of the opportunities that are opening up, SMEs will be a central part of the picture,” he says.
Winters is one of the authors of a separate study, released this morning by the Federation of Small Businesses (FSB) and the UK Trade Policy Observatory at the University of Sussex, which has some pointers for British businesses looking to make the most of any post-Brexit trade pacts.
The research involved a comprehensive review of recent major trade agreements for provisions that will help SMEs in particular achieve their trade ambitions. These range from supporting e-commerce, protecting intellectual property rights through robust enforcement, and supporting trade facilitation – particularly with regard to customs procedures. It identified the US as the top country for small UK firms to trade with over the next three years, with Germany and France coming in second, and calls for SMEs to be placed at the heart of UK trade policy as the country prepares for its future outside of the EU.
“Small businesses are already the backbone of the UK’s domestic economy. For our country’s future prosperity, we now need to see their share of global start to catch up, by putting SMEs front and centre of all new trade agreements, especially as we depart the EU,” says Mike Cherry, national chair of the FSB.