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UK exports increase for third consecutive year

The value of goods exports has increased once again across all four regions of the UK as demand for British products continues to grow overseas. 

Through the 2018/19 financial year, Scotland recorded the highest growth, whilst Wales and Northern Ireland also returned strong international trade increases. England continues to deliver the highest trade value with nearly £252 billion in export sales from goods. 

  • England | +3% to £251.9bn
  • Scotland | +12.9% to £32.8bn
  • Wales | +7.5% to £17.7bn
  • Northern Ireland | +4.4% to £9bn

The number of exporting companies also grew by over 5,000 to 110,831 in the first quarter of the year compared to Q1 2018 – a new record. 

International Trade Secretary Liam Fox commented on the latest HMRC figures that: “Whether it is an exporter in rural Derbyshire or the Scottish Highlands, people and businesses across the world want to get their hands on British goods at unprecedented levels.

“The data released today pays homage to the hard work of people working in British businesses up and down the United Kingdom, who are now exporting their goods on unprecedented scales.

“I am delighted that exports continue to grow in every part of the UK, this shows we are working for every corner of our country and are not led by one region alone.”

Continued demands and goods sales from British companies overseas defeats some predictions that foresaw an international sales slowdown from UK firms following the EU referendum result. 

Yet, with the latest Brexit deadline of 31st October approaching, and the next two candidates to become the next Prime Minister openly backing a no deal exit should no agreement be reached for the UK’s departure, demand for British goods and the number of exporting local companies has never been higher. 

Read more: Scottish food & drink exports rise to record £1.4bn

However, many companies have invested millions of potential growth investment into preparing for a no deal Brexit already in goods stockpiling and in some instances, upping sticks to create new bases on the continent. 

To continue export success it’s critical that all businesses that trade with the EU or rely on stock and components from within the single market are ready for whatever Brexit outcome on what seems to be an increasingly more certain 31st October deadline. 

If your firm has only recently begun exporting or are yet to begin or finale Brexit strategy, see how Go Exporting can help audit your Brexit readiness here.

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U.K. car production down for national and global markets as manufacturers take early summer break

Car production in the U.K. has been cut almost in half as manufacturers induce an early summer slowdown.

According to the Society of Motor Manufacturers and Traders (SMMT), factories produced nearly 45% fewer vehicles in April compared to a year previously with just 71,000 cars rolling off production lines – 60,000 fewer than April 2018.

And production slowdown also occurred for overseas markets where there was a 44.7% rollback.

According to the SMMT, car firms have brought forward usual summer stoppages in a process including stockpiling of components, training and customs procedures that had been prepared for a 29th March Brexit.

Chief executive at SMMT, Mike Hawes said of the data that: “Today’s figures are evidence of the vast cost and upheaval Brexit uncertainty has already wrought on UK automotive manufacturing businesses and workers.

“Prolonged instability has done untold damage, with the fear of ‘no deal’ holding back progress, causing investment to stall, jobs to be lost and undermining our global reputation.”

The UK car industry is very much in recession with 11 consecutive months of output slowdown, but that forms only a small part of a larger industry picture by which global growth in car sales has seen significant challenges, brought on in part by the trade tensions between the US and China, as well as the growing electric car market spearheaded by the likes of Tesla and also tougher environmental controls.

Read more: Trade deficit reaches record quarterly high as British firms stockpile goods

“This is why ‘no deal’ must be taken off the table immediately and permanently, so industry can get back to the business of delivering for the economy and keeping the UK at the forefront of the global technology race,” Mr Hawes concluded.

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Trade deficit reaches record quarterly high as British firms stockpile goods

The trade deficit remains far higher than forecast by City economists as British businesses continue to stockpile critical goods and components ahead of a delayed Brexit.

The deficit in Q1 this year hit £18.3bn, a record high for any three month period and nearly double the £9.4bn disparity seen in the final quarter of last year.

However, there are indications that businesses are slowing their inventory intake as the value gap between imports and exports narrowed to £5.4bn in March from £6.2bn in February, with continued narrowing expected before the end of October as businesses batton down the hatches.

We could still, however, see a flurry of late purchasing and stocking of raw materials in the run-up to the new Brexit deadline should a no-deal exit from the European Union look more likely than not.

Businesses have actually been more active of late, utilising the slight break to the imminent danger of a no-deal Brexit in much the same way as the housing market, with private-sector business activity rebounding in April with the services sector, in particular, returning to growth.

Read more: Brexit delayed again, but your preparations must go on

But for exporting firms, the value of the pound has added a further complication this month as values against the dollar and euro fell following the announcement that Theresa May will step down as Prime Minister and leader of the Conservative Party.

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Majority of small businesses feel unsupported as Brexit beckons

Over three-quarters of small businesses in the UK feel unsupported ahead of Brexit, according to a new report.

A survey carried out by Simply Business uncovered that 76% of the 1,200 small business owners they asked feel like they lack the support they need in the run-up to the UK leaving the European Union, whilst 20% said they didn’t know where to turn for help and advice.

The survey also found that 35% of SME leaders have decided to delay growth plans, although this figure also highlights the majority of firms which are pressing on with expansion plans.

COO at Simply Business, Bae Montoya commented of the results that: “There isn’t a blueprint for what happens after Brexit, which is particularly challenging for the UK’s 5.7m hardworking SMEs.

“The self-employed are the backbone of the British economy, and they deserve more support and guidance – after all, it’s they who employ the majority of the UK workforce.

“A workforce which, according to our survey, is potentially at risk. Surely the government can clarify guidelines for what steps SMEs should take?”

Why it’s critical SMEs get the right Brexit support

xit

Uk small businesses are the powerhouse of the UK economy, employing 16.3m people or 60% of private sector workers – in work. And whilst British stalwarts may get the headlines, small and medium-sized firms account for 99% of all UK businesses according to the Federation of Small Businesses.

And that’s why it’s critical small firms are as supported as possible when it comes how Brexit may affect their businesses, how to prepare and what to focus potentially limited resources on in the run-up to Brexit day.

Read more: International demand for British gin & whisky delivers record export drinks sales

Yet whilst it’s clear the pivotal role that small and medium-sized companies play in the UK economy, these firms are the most likely to lack the internal expertise and resource to effectively plan for and strategise against Brexit uncertainty now and any disruption in the future.

This is one of the reasons why Go Exporting launched our Brexit Consultancy, a cost-effective audit of business readiness for all eventualities of Brexit.  

Go Exporting can help you navigate the Brexit minefield. Contact us today to arrange a review of the potential impact on your business.

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Government extends £8m customs training application deadline

HMRC has extended the deadline of its customs training fund until 31st May 2019 to help businesses prepare for Brexit.

The £8m fund, which was announced in October last year, is designed to help businesses prepare for a no-deal scenario and includes funding to train intermediaries and traders completing customs declarations, IT improvement funding and the increase in the number of short-term courses available to support customs brokers.

Financial Secretary to the Treasury, Mel Stride MP commented that: “We are doing everything we can to get businesses ready for the UK leaving the EU, however, businesses also need to take action themselves to prepare.

“There is help available – we have provided funding to support businesses with customs processes, and we are now extending the deadline to 31 May 2019 giving more time for applications.

“We have already received over 300 applications, and I’d urge businesses to apply as soon as possible to avoid missing out.”

Read more: UK economy has missed out on £550m a week since EU referendum

The two grants which can be applied for, the training and IT improvements grants, are applicable to businesses who complete customs declarations and import/export into the EU, whilst firms with fewer than 250 employees, an annual turnover of less than €50m and who complete customs declarations on behalf of EU-trading firms can apply for the latter.

If your businesses could benefit, you can read more about applying for the grants on the Government website here.

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UK economy has missed out on £550m a week since EU referendum

A new report has suggested that Brexit has cost the UK economy £550m in lost growth since the referendum in June 2016 – £66bn worse off in just three years.

That’s according to Standard & Poor’s Brexit report, which noted the fall in the value of sterling as one of the primary factors affecting potential economic growth.

Senior economist at S&P, Boris Glass noted that: “Uncertainty over the shape and form Brexit will take has increasingly paralysed any forward-looking decision making.

“This is reflected in particular in a contraction of business investment in 2018.”

S&P’s analysis was actually more favourable than Goldman Sachs and The Bank of England, who estimate lost growth to be £600m and £800m per week respectively.

However, major businesses are still more than optimistic about the trading conditions in the UK and the ease of doing business. CEO of Made.com noted the UK has the best location in Europe to do business, ahead of Berlin and Paris… despite Brexit.

Read more: Germany increasingly concerned by lack of SME Brexit readiness

In an interview with The Telegraph, Philippe Chainieux commented that: “The UK has been, and I think, still is, a more international hub, attracting money first of all, and talent from across the world.

“Berlin, Stockholm and Paris are far behind from that perspective.

“The merit of London is that it’s easier to build an international business here because the capacity to attract people from everywhere, to attract talent, culture, world understanding in one single hub is absolutely huge.

“In fact, it’s so much easier to do it here than anywhere else in Europe.”

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Less than Lush Brexit outlook for cosmetics giant

The head of bathbomb and scented soap retailer Lush has given an insight into the potential damage a no-deal Brexit could cause to his business.

Mark Constantine has lambasted the government’s approach to negotiations and its attitude towards businesses as the firm’s financials took a swung from a £23m profit to £4m operating loss last year.

He commented that: “Brexit is the most impactful thing on our business because of the sheer incompetence of the government.

“You can’t be the party of business and be anti-immigration. I believe we are heading into a recession and a lot of that has been caused by the government.”

Read more: Three-quarters of UK manufacturers report Brexit is damaging business planning and prospects

Constantine also gave an insight into the potential damage that no-deal Brexit could cause to the business, estimating a £2.6m World Trade Organisation tariffs bill whilst product stockpiling could cost another £1.3m.

The company has already set-up a new factory in Germany to handle EU orders which had previously been serviced from the UK.

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Germany increasingly concerned by lack of SME Brexit readiness

Small businesses in Germany are being warned that too many are unprepared for Brexit and the potential disruption the UK leaving the EU will cause native firms.

The warning primarily centres on financial services and access to financial products.

Banks on the continent have been shifting market-related activities for some of their EU clients, such as currency swaps, away from London in preparation for Brexit to avoid disruption.

However, some banks have warned that they can only move clients’ businesses if they give the green light to do so which can require the renegotiation of contracts.

Some have admitted their advice is falling largely on deaf SME ears.

“Too many clients do not react at all”

Central bankers at Deutsche Bundesbank have issued a warning to small businesses and reminded them that they are ready to help them prepare – should they choose to take the time to do so.

Board member Joachim Wuermeling said: “The banks are approaching their clients which might be affected by Brexit. The snag is that the response is very limited.

“Too many clients do no react at all.

“Even if Brexit will be postponed, all EU companies, be them small or large, are well advised to check hidden financial links to the UK.”

However, the disruption should only cause small-scale gridlock, with Commerzbank’s head of corporate client development and digitalisation, Jan-Philipp Gillmann stating that: “Only a small number of new or existing trades will need to be transferred or migrated to another subsidiary or branch due to Brexit.”

uk business brexit

Perhaps unsurprisingly, the general notion on this side of the Channel is that businesses have been preparing for Brexit, especially as the potential for a no-deal appears to be increasing.

Read more: Fishing industry urged to avoid no-deal exports catch

Around 40% of businesses said they were ready to enact on Brexit contingency plans at the start of 2019 according to the CBI, whilst data from OFX suggested that UK SMEs are planning to press on with EU exports despite Brexit this year.

If your business has little contingency planning for Brexit, deal or no deal, it’s not too late to put in place emergency measures and plans to negate where possible the potential short-term damage and disruption.

Contact Go Exporting today to find out how we can help, or read more about our Brexit consultancy.

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Fishing industry urged to avoid no-deal exports catch

UK fish exporters are being urged to sign-up to a new digital catch certificate service to ensure they’re able to continue selling to the EU in the event of a no-deal Brexit.

Advice published by the Department for Environment, Food & Rural Affairs this month said that businesses should take action now to avoid issues from 29th March onwards should a deal or article 50 extension not be reached, with the new digital catch certificate applying to most fish and fish products.

Catch certificates prove that fish have been caught within conservation and management measures for which all non-EU countries must present when trading into the European Union.

It’s the latest in a string of official advice published to guide the UK fishing industry and navigate the choppy Brexit waters, including advice on health and customs regulatory compliance in the event of a hard exit.

Read more: Strong appetite for British food and drink overseas

Export documentation that may be required following the 29th March include:

  • catch certificates
  • processing statement
  • storage document
  • prior notification form
  • pre-landing declaration

Fish export businesses can find all the information they need on the digital catch certificate service and how to apply on the government website here.

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71% of UK manufacturers have an export-based growth strategy

Over 70% of UK manufacturers have an export-based growth strategy for their business.

That’s according to the latest Annual Manufacturing Report data from The Manufacturer, whereby 71% of manufacturers are actively seeking new markets to penatrate.

The news is positive and highlights the resilience and optimism of exporting manufacturers in the UK in the approaching wake of leaving the European Union, although it should also be considered that many UK exporters trade outside of the EU – over 50% in fact according to the Office for National Statistics (2016).

The report really highlighted a split in outlook and sentiment when it comes to future business, and that split, unsurprisingly, was Brexit.

As we reported here, some 71% of businesses who answered the survey say that Brexit uncertainty is damaging strategic planning and business prospects. A further 54% reported that Brexit would cause severe issues for their business.

But when focusing inwards at their own business and capabilities, the sentiment is far more positive.

For example, nearly  80% of respondents say they have confidence they have the capacity for growth. Also, 67% say they are confident overseas trading conditions are good for promoting business growth.

The report also noted that businesses aren’t quick to lavish praise on the government’s support of exporters, with 55% saying it should do more to promote exports and exporting firms.

And on one of the ways the UK government could do more, especially after 29th March, subsidising any future trade tariffs was noted.

Read more: Three quarters UK manufacturers report Brexit is damaging business planning and prospects

As Andrew Bennet, managing director of Allan & Bertram told The Manufacturer:  “If we end up with tariffs on exports to Europe, I assume there would be similar tariffs applied to imports from Europe, so I expect the government to allocate this revenue to exporting businesses to compensate for the export tariffs and allow us to remain competitive.

“Not only does the government need to support the business economy in practical terms, it needs to be seen to be doing so.

“If the government worked with businesses to get us all prepared, that could send a very powerful message to the UK and the EU negotiators – ‘We are ready!’”

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