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Confidence ‘picking up’ as UK exports into EU rebound

Trade between the UK and the EU recovered in February after a big drop at the start of the year. 

Following the end of the transition period and the start of ‘Brexit for real’ for companies on both sides of the Channel, exporting activity had slumped 42%. 

But data from the ONS found that exports jumped almost 47% in February, but are still below last year’s activity. 

February’s rebound was predominantly fueled by export increases of machinery, transport equipment and chemicals – particularly cards and pharma products. Interestingly, growth in exports from the UK to the EU was stronger than EU into the UK. 

An ONS spokesperson said of the data that: “Exports to the EU recovered significantly from their January fall, though still remain below 2020 levels. However, imports from the EU are yet to significantly rebound, with a number of issues hampering trade.”

Read more: Food and drink exports crippled by Brexit and lockdowns

The rebound against January’s slump is still difficult to truly analyse to see how export markets are responding to Brexit. Many companies avoided sending goods across the border at the start of the year to avoid expected Brexit disruption, especially across machinery, parts and pharmaceutical products that were stockpiled towards the end of 2020.

The ongoing pandemic also continues to skew and disrupt demand. 

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Brexit confounding challenges for British steel industry

UK steel exports into the EU have dropped significantly since Brexit, with volume in Q1 2021 down a third on previous years. 

Trade body UK Steel shared the figures with the Mirror, showing how shipments from the UK into the EU fell from an average of 630,000 tonnes to just 420,000 tonnes in the first three months of the year. 

The data suggests a Brexit-related slump in demand with British steel exporters using less than 60% of their quotas in the first quarter.

Director-general of UK Steel, Gareth Stace, said that: “This is a challenging time for the UK steel sector as it does its utmost to adapt to challenging new trading conditions and recover from the impacts of Covid-19.

“This first quarter of export data demonstrates quite how challenging market conditions are for the sector at this time and the new barriers now in place between us and our largest export market.

“We are confident that some of these export difficulties will lessen as time goes on, but unfortunately many will be a permanent feature of our new trading relationship with the EU.”

Read more: How to export post-Brexit (webinar)

The British steel industry has been fighting for survival for years, but a changed relationship with the EU and the pandemic is likely making the situation more challenging. Liberty Steel is the latest to face challenges, with 3,000 jobs and 11 UK plants at risk following the well-publicised collapse of Greensill Capital. 

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Navigating the Indian market (Interview)

Last month, Go Exporting CEO Mike Wilson joined Pervinder Singh, the editor and founder of the UK India Trade Portal to discuss navigating the Indian market and opportunities for bilateral trade. 

In the interview, the two discuss why British companies should consider trading within the Indian market and the most effective approaches to market entry. 

Watch in full below, and make sure you subscribe for more insightful content from the UK India Trade Portal here.

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How to export post-Brexit (webinar)

This week we joined Enterprise Nation for a Lunch and Learn session all about exporting following the end of the transition period at the start of the year. 

In this webinar recording, learn the implications of Brexit with a guide and checklist on how to prepare for export in a post-Brexit world. 

Watch the webinar recording in full on the Enterprise Nation website here.

Access the Brexit guide discussed in the webinar here.

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Food and drink exports crippled by Brexit and lockdowns

UK food and drink exports have suffered a huge year-on-year trade reduction according to new data from HMRC. 

Data compiled by the Food and Drink Federation shows showed a £42m fall in cheese exports – from £45m to just £7m – whilst whisky exports fell from £105m to just £40m. Chocolate exports also suffered, dropping almost 70% to £13m. 

Whilst the biggest falls in export value, these were by no means the worst affected products. Salmon and beef dropped 98% and 92% respectively. 

Causes of the drop in export demand include a combination of Brexit and weaker demand from a continent that still largely remains in lockdown with restaurants shut.

Read more: Trade between UK and EU nations falls

An ONS spokesperson added some context to the data, noting that: “A unique combination of factors, including stockpiling last year, Covid lockdowns across Europe and businesses adjusting to our new trading relationship, made it inevitable that exports to the EU would be lower this January than last.”

If your business has been impacted, we can help

Go Exporting has already helped a number of companies both prepare for Brexit, and now workaround new restrictions, regulations and challenges. 

Our Brexit FastTrack service offers a detailed review of businesses post-Brexit to help resolve the issues they’re encountering – with a quick turnaround and at a fixed price. 

Some firms may also be able to reclaim the cost of this service via the SME Brexit Support Fund.  

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London maintains status as Europe’s financial hub

A study released this month has found that London has maintained its status as Europe’s main financial hub – but global players are catching up. 

That’s according to Z/Yen’s Global Financial Centres Index (GFCI) which reported that, although London had maintained second place globally, it has lost 23 index points since September 2020 with Shanghai, Hong Kong and Singapore closing in. 

The news is significant as there had been real concern over the capital’s future status in both EU and global finance in the wake of Brexit, particularly with the lack of an equivalence deal maintaining its access to continental markets. 

Yet despite holding on to EU dominance, the Bank of England has suggested over 7,000 jobs have been lost to rival centres in the EU following the end of the transition period. But a jobs exodus from London has yet to be realised within finance, and a report from Business Money even shows a 10-fold rise in businesses looking to open satellite offices in the UK. 

There have been further reports this month that Chancellor Rishi Sunak is planning to set light to a range of EU rules in a bid to secure London’s position as a global financial centre. 

Read more: Quarter of all full-time UK jobs supported by export activity

Chairman at PwC UK, Keven Ellis, commented that: “Not only has the UK grown in appeal to some of our newer trade targets, but it remains an important market among our European neighbours, with 15% of Germany’s CEOs saying the UK is a top 3 growth target, compared with 13% in 2019.

“These are encouraging signs but there’s more to do to enhance the UK’s position and investment attractiveness in what remains a very uncertain world.”

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Quarter of all full-time UK jobs supported by export activity

A report published this month has highlighted just how vital exporting is in supporting quality jobs. 

The assessment report on jobs, published from the Fraser of Allander Institute at the University of Strathclyde, found that 23% of all UK full-time jobs in 2016 were supported by exports. 

Of those FTE jobs supported by exporting activity, 58% were directly related whilst 42% were involved in supply chains of exporting industries. 

The report also found that manufacturing made up the bulk of export-related jobs. Trade with the US accounted for the largest number of supported jobs at 1.3 million, whilst EU export activity occupied 2.8 million FTE workers. 

The release of this report coincided with new findings from the government’s Board of Trade report, finding that during 2016, exports supported 6.5 million jobs in the UK – paying on average 7% more than the national median wage. 

Secretary of State for International Trade, Liz Truss, said in her foreword for the report that: “For the first time in almost 50 years, the UK is in control of its own trade policy and we have renewed this centuries-old institution (Board of Trade) to bring together leaders in business, academia and government.

“As a nation, we have not been in a position to steer our own trade debate for generations. Now we can and I believe the Board will play a crucial role in this vital discussion.”

Read more: New Gov campaign to support UK producers export food and drink internationally

“We have a great story to tell as a trading nation, and now as we set out into our future as an independent country with the whole world as its marketplace, we will champion values-driven free trade as a force for good in the world and a driver of prosperity for every part of the United Kingdom.”

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Trade between UK and EU nations falls

Export and import activity between the UK and France has dropped some 20% since the start of the year as businesses on both sides of The Channel continue to struggle against Brexit disruption.

According to the French customs office, exports from France into the UK fell 13% in January compared to the previous six-month average, whilst exports from the UK into France dropped 20%.

Whilst some pandemic-related ground has been recovered, especially as firms on both sides stockpiled critical components and goods, Brexit uncertainty and new friction-creating barriers has hampered that volume recovery. Meanwhile, French exports and imports with other nations increased. 

And despite the trade deal, higher shipping costs, health certificate requirements, complex customs requirements and transportation delays have all contributed to increased commercial costs and reduced activity. 

Activity isn’t only down between the UK and France either. A more marked 30% downturn can be seen in German exports to the UK – a continued decline that began after the Brexit referendum in 2016. The steepest declines have been in Italy, with a 38% fall in exports to the UK and a 70% drop in imports. 

Read more: Half of UK exporters struggling to adapt to Brexit changes

Gullies Moec, chief economist at Axa commented that: “I have a hard time deciding what is the impact of Brexit and what is simply down to the impact of coronavirus.

“There were so many stories about companies that had trouble exporting or importing after Brexit and a lot of hauliers were reluctant to deal with the customs issues, so there must have been an impact.”

If your business has been impacted, we can help

Go Exporting has already helped a number of companies both prepare for Brexit, and now workaround new restrictions, regulations and challenges. 

Our Brexit FastTrack service offers a detailed review of businesses post-Brexit to help resolve the issues they’re encountering – with a quick turnaround and at a fixed price. 

Some firms may also be able to reclaim the cost of this service via the SME Brexit Support Fund.  

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New Gov campaign to support UK producers export food and drink internationally

The Government has launched a new initiative aiming to boost exports of food and drink internationally for UK farmers. 

Called the ‘Open Doors’ campaign, the initiative will focus on growing middle-class markets including in Asia. 

The scheme will be welcome news for UK producers, many of whom have struggled since January 1st exporting food products into the EU. 

International trade secretary, Liz Truss, said of the launch of the scheme: “Our farmers need access to new markets around the world, but we need to get rid of the barriers holding them back. We will help you get out into the global market.

“Exporting supports higher wages, productivity, and high-quality jobs, but one in five of our food manufacturers export. We want to unleash the potential of many more businesses, which is why I am glad today to announce a new export campaign for British food and drink.”

She continued: “We are dubbing this our Open Doors campaign, reflecting the work we are doing to open new doors for farmers and food producers to unprecedented opportunities across the world. We need to look beyond our shores. By the end of this decade, 66% of the world’s middle-class consumers are expected to be found in Asia.

Read more: SMEs can now apply for grants to cover the cost of professional export consultancy

“They are hungry for top-quality food and drink, where they know – from farm to fork – that high standards have been at the heart.”

If your business is still working to adapt and change to the new trading relationship with the EU, we can help. Our Brexit FastTrack service can deliver a detailed review of your business post-Brexit to resolve the issues you are encountering. 

Learn more here.

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Half of UK exporters struggling to adapt to Brexit changes

A major report from the British Chambers of Commerce has found that 49% of UK exporters are facing difficulties adapting to new Brexit regulations around the trading of goods. 

The survey of 1,000 firms, the majority of which were SMEs, found that firms are struggling with the changes following the ratification of the UK_EU Trade and Cooperation Agreement. 

Key results from the survey included 30% of respondents reporting difficulties adapting to changes in moving or trading goods in the first month of the year. Only 10% said they’d found adapting easy, with another 16% saying it was too early to say (the survey was conducted between 18th and 31st January). 

In total, 49% of businesses and 51% of manufacturers reported struggles with increased admin, costs, delays and confusion over the rules and which to follow proving the most common difficulties.

Adam Marshall, BCC director-general, said of the survey results that: “Trading businesses – and the UK’s chances at a strong economic recovery – are being hit hard by changes at the border.

“The late agreement of a UK-EU trade deal left businesses in the dark on the detail right until the last minute, so it’s unsurprising to see that so many businesses are now experiencing practical difficulties on the ground as the new arrangements go live.

“For some firms, these concerns are existential, and go well beyond mere ‘teething problems’. It should not be the case that companies simply have to give up on selling their goods and services into the EU. Ministers must do everything they can to fix the problems that are within the UK’s own control, and increase their outreach to EU counterparts to solve the knotty issues that are stifling trade in both directions.

Read more: Free webinar on exporting goods & services to the EU at Emerging Tech Fest

“This situation could get worse if the UK sticks to its guns and introduces additional SPS checks in April and full customs checks on imports in July. These timescales need to change – and the support available for businesses who are battling to adapt to new trading conditions significantly increased.”

SMEs grants for expert support

To help small firms adapt to the new trading relationship with the EU, many are now eligible for grants of up to £2,000 to help cover the cost of training and professional advice as part of the £20 million SME Brexit Support Fund.

If your business is still working to adapt and change to the new trading relationship with the EU, we can help. Our Brexit FastTrack service can deliver a detailed review of your business post-Brexit to resolve the issues you are encountering. 

Learn more here.

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