'More than a quarter of goods exporting firms are suffering continued falls in EU sales'

MORE than a quarter of British goods exporters are experiencing continued falls in sales to EU customers, according to a major economic survey.

File photo of the EU and Union flags.
File photo of the EU and Union flags.

The British Chambers of Commerce’s Trade Confidence Outlook for Q2 (the second quarter) reveals exporters are still facing “significant issues” after a historically weak first quarter.

Respondents cited issues arising from Brexit as the main cause of difficulties with export sales in the quarter, according to the outlook survey. Many pointed to ongoing issues with the TCA (EU–UK Trade and Cooperation Agreement), increased red tape or costs and losing EU-based clients or customers to the perception that trade was now simply too difficult or complex.

The survey of more than 2,800 UK exporters revealed that the percentage of firms reporting increased export sales had risen to 27 per cent, a seven-point rise from the previous quarter.

The percentage of businesses reporting decreased export sales fell to 28 per cent, down from 41 per cent, which remains a historically high proportion, according to the chambers of commerce. Forty-five per cent reported no change in their export sales.

Responding to the findings, head of trade policy at the British Chambers of Commerce, William Bain said: “Six months into the new trading relationship, more than a quarter of goods exporting firms are experiencing continued falls in sales to EU customers. This is a historically high number.

“Our exporters are among the best problem solvers and innovators in our economy, and yet our data demonstrates that they are still struggling to resolve the issues they currently face.

“As the UK and EU economies open up, we urge both sides to address the key pressures upon exporters – the red tape around import VAT and the new portals, paperwork and checks for agri-food exports, consistency of approach on customs rules and checks, looming deadlines on CE-marked goods, and the restrictions on labour mobility and service provision.

“It’s clear the TCA needs to be built upon and applied in ways which cut the current red tape costs. We must solve these issues so that exports can become a driving force in our recovery from the pandemic.”

The percentage balance data showed that the proportion of firms reporting increased export sales has recovered slightly, after taking a downward turn in the first quarter. Overall, 35 per cent of manufacturing exporters surveyed reported increased overseas sales in the second quarter, with 27 per cent reporting a decrease and 39 per cent reporting no change.

The breakdown of services between B2B (business to business) and B2C (business to consumer) exporters reveals that a considerably larger proportion of B2C exporters are seeing a fall in overseas sales; 38 per cent of B2C exporters surveyed reported a decrease in export sales, in comparison to 21 per cent of B2B firms. The proportion reporting increased sales was similar between B2B and B2C, at 23 per cent and 22 per cent respectively.

"For B2B this represents an 11-point fall from 34 per cent reporting increased sales in Q1.

These numbers come on the back of historically high proportions of both B2B and B2C firms reporting decreased sales in the previous quarter, 31 per cent and 51 per cent respectively.

The statement from the British Chambers of Commerce added: “Across a number of metrics... exporters were more likely than non-exporters to report rises.

“This ties with historical data showing exporters as more likely to display confidence as they push into new markets or develop new products.

“Given that the recovery in overseas sales continues to lag domestic sales by a significant margin, it can be seen that, despite being dynamic businesses, exporters are still struggling to grow sales in the face of the issues currently affecting trade.”

Six months on from Brexit, research from the business and financial adviser Grant Thornton UK LLP concludes that almost half (48 per cent) of Yorkshire mid-sized businesses believe that Brexit has strengthened ‘Brand Britain’.

In its survey of mid-sized businesses, Grant Thornton found that ‘Brand Britain’ is also considered to be an advantage to Yorkshire firms looking to venture into international markets – two thirds of those surveyed believe it is helpful when trading internationally, and only 8 per cent disagreed.

In Yorkshire, 36 per cent of respondents expect to export more to the Eurozone than they had before the pandemic, while 34 per cent expect to grow their export business in North America.