Food and drink exports from the UK have fallen by 12.9% so far in 2020 as manufacturers struggle to deal with the Coronavirus pandemic and uncertainty surrounding Brexit.
The data, released by the Food and Drink Federation, showed that exports to key markets including Spain were significantly down (almost 34% into the Spanish market), whilst sales of the otherwise export success story of whisky dropped the most – down 19% to just over £900 million.
Q3 2020 saw an 11.6% exports decline compared to the same period last year, with both exports to the EU and non-EU markets falling.
Head of international trade at the Food and Drink Federation, Dominic Goudie, commented on the findings that ensuring a quick return to growth will be essential to the industry as the UK looks to continue its economic recovery from the pandemic.
The UK’s food and drink sector is also struggling to find enough vets, an issue which could cost up to 75% of trade volume into the EU from next year.
Export health certificates must be signed by an official veterinarian to confirm that certain food or animal products meet import requirements, but a lack of qualified and available official vets in the UK could see delays.
In September this year, the British Meat Processors Association warned that Britain simply doesn’t have enough vets to deal with export inspections post-Brexit, with chief executive Nick Allen commenting that: “We have been pressing the Government for three years now to lay out the details of exactly how these barriers to trade will be dealt with. They have known since the beginning that we will need an army of extra qualified vets to cope with the 500% increase in workload.”
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“All the guidance in the world is useless if we are not able to complete required export paperwork because of a chronic shortage of vets. If this is not addressed, £175 million per month of meat exports will be at risk.
“The bottom line is that British companies cannot prepare effectively for Brexit because the UK Government is not keeping to its side of the bargain by putting in place the right measures and resources and failing to give us the answers we desperately need.”
If your organisation is one of the thousands who have been unable to fully prepare for Brexit, then our Brexit FastTrack service could help you #BeBrexitReady, and fast. Find out more here.
The UK and Kenya this week signed an economic partnership agreement which will ensure all companies operating in Kenya can continue to benefit from duty-free access to the UK market.
The deal is, in essence, a translation of the terms previously agreed between the EU and the East African Community and has scope for further EAC states to join in the future.
Worth £1.2 billion last year, the agreement seeks to support jobs and economic development in Kenya whilst also ensuring tariff-free access for key imports into the UK including tea, coffee and spices, vegetables and flowers – worth a combined £250 million alone.
The UK is a key market for Kenya, accounting for 43% of all vegetable exports and almost 10% of cut flowers, whilst 2,500 UK forms currently export goods into the Kenyan market, including machinery, electronics and technical equipment supplies.
Ranil Jayawardena, the UK’s international trade minister who signed the deal in London alongside counterpart Betty Maina, commented on the agreement that: “I am delighted that today we have signed a trade agreement with Kenya. This deal makes sure businesses have the certainty they need to continue trading as they do now, supporting jobs and livelihoods in both our countries.
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“Today’s agreement is also a first step towards a regional agreement with the East African Community, and I look forward to working with other members to secure an agreement to forge ever-closer trading ties.”
Over the last two years, 55 new trade agreements have either been signed or agreed in principle as the UK continues the countdown to Brexit proper on January 1st.
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Last month, Go Exporting teamed up with Allica Bank to host a webinar which discussed how small and medium-sized businesses can unlock new markets to future-proof their firms.
On-top of specialist advice, the Q&A at the end also provided some great insights.
The webinar is free to watch right here.
Tech exports from the UK could be set to grow 35% over the next five years according to a new report, worth over £8 billion.
According to Tech Nation’s report Unlocking Global Tech which looked to asses the value of UK digital tech exports and opportunities for the future, UK exports are booming with the trade surplus rising by almost 70% since 2015.
The government-backed trade association highlighted international markets such as the US, Canada, The Netherlands, Canada and Germany as highly attractive export markets for tech firms, whilst Singapore and Brazil are high-growth global opportunities.
Already the 5th largest digital tech service exporter in the world (surpassed by only India, the US, China and Germany), the potential for high growth by 2025 lies partly in the number of rapidly-growing UK-based tech firms – many of which are yet to reach their full international potential.
Gerard Grech, chief executive of Tech Nation said of the report that: “The UK is a natural home for many scaling tech businesses, and there are a proportionally high number of scaling tech businesses located here that are already well-established in delivering domestic tech services.
“The UK is also third in the world for the number of UK tech unicorns, and number one in Europe. These factors give us a strong conviction that UK founders, government and industry leaders should all be gearing up to double tech exports by 2025, in the aftermath of both the pandemic and Brexit.”
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“By doubling exports, UK tech could contribute an additional £23bn to the economy per year by 2025 and move up the ranks to become a top global exporter of tech.”
Trade talks between the UK and Japan over a post-Brexit trade deal were by all reports going in the right direction with both sides suggesting an agreement could be in place by the end of the month.
However, talks appear to have hit something of a hold-up. The culprit? Stilton cheese.
Talks have apparently been blown off course after Liz Truss, recently appointed international trade secretary, looked to secure a better deal regarding British blue cheeses.
A favourite on cheese boards and sandwiches in the UK, blue cheese sales to Japan only totalled just over £100,000 last year and the government will be hoping a better deal between the UK and Japan directly may trump the recently-agreed EU-Japan trade deal and serve as a boost to British producers.
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Not much has come out of the government specifically relating to stilton, but Truss has recently commented that: “Negotiations have been positive and productive, and we have reached consensus on the major elements of a deal – including ambitious provisions in areas like digital, data and financial services that go significantly beyond the EU-Japan deal.
“Our shared aim is to reach a formal agreement in principle by the end of August.”
The UK has begun the first round of trade negotiations with Japan in the first step of government plans to join the Comprehensive Progressive Agreement for Trans-Pacific Partnership (CPTPP) – a trading region which covers nearly 500 million consumers from Australia and New Zealand to Chile, Canada and Peru amongst others.
Designated ‘a key UK priority’ for a post-Brexit business environment, a trade deal could boost the UK economy by £1.5bn with an agreement based on the existing EU-Japan agreement, although the UK is looking to secure additional benefits which will likely include digital trade and tighter financial cooperation.
Secretary of state for trade, Liz Truss, said she hopes a trade deal will be concluded before the Brexit transition period ends on 31st December.
“We aim to strike a comprehensive free trade agreement that goes further than the deal previously agreed with the EU, setting ambitious standards in areas such as digital trade and services,” she said.
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Japan is the third-largest economy in the world with a GDP of $5.18 trillion with UK-Japan trade worth £31.4bn last year. And exports to the region have been growing, up 8.5% over the last 24 months.
Increased digital trade will prove a key part of any future agreement with Japan’s future e-commerce market set to grow by almost 30% over the next two years and be worth more than $200bn.
The coronavirus pandemic has hit food and drink exports hard with a £700 million drop in value compared to 2019, equating to a 12.7% fall.
That’s according to the Food and Drink Federation who noted whisky, chocolate, cheese, salmon and gin as the hardest hit, pulling back on increasing demand over the last five years for British whisky, gin and salmon in particular.
However, pork saw an increase in value whilst the volume of vegetable and beef exports also rose.
Sales to the EU were the most impacted with total value falling by 17.4%, driven primarily by the immediate impact of Covid-19 as hospitality and travel sectors shut down across the continent.
But further afield, the picture is a little rosier. Outside the EU, demand has remained resilient with sales of branded food and drink products increasing in the US, Australia and China. Demand for cakes and baked goods in Australia grew 12% compared to the same period last year whilst the exports of gin, bottled water and infant food grew to £34m in China. Demand for British beer and soft drinks spearheaded near-7% overall export growth to the US too.
Head of International Trade at the FDF, Dominic Goudie, commented that: “Manufacturers and the other hidden heroes working across the supply chain have ensured continued access to essential food and drink for UK shoppers during this crisis. But we can now see how COVID-19 has impacted valuable overseas sales of UK food and drink that were worth over £23 billion in 2019.
“The closure of the hospitality sector in high-value export markets in the EU and further afield has been devastating for many exporters. However, we can also see that opportunities do remain in retail channels in many markets.
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“Ensuring a quick return to growth will be essential to support resilience in our industry and also the UK’s economic recovery. We are working closely with Government and industry partners to set out a recovery plan that will deliver a return to sustainable export growth right across the UK.”
The government has agreed to temporarily guarantee trade credit insurance to support businesses struggling to get cover during the pandemic.
The guarantee will help both domestic and exporting companies within the supply chain.
With almost all sectors being financially impacted due to coronavirus, some firms have seen the number of payment defaults increase, making it harder to manage cash flow as well as more difficult to get trade insurance in the first place.
The scheme will launch at the end of this month with the government agreeing to a temporary reinsurance arrangement with trade credit insurers in a move which it hopes will ‘support supply chains and help businesses to trade with confidence as they can trust that they will be protected if a customer defaults on a payment’.
John Glen, economic secretary to the Treasure commented that: “This country’s businesses are crucial in helping us to kick start the economy as we get back to work, and I will do everything I can to help support them through this difficult time.
“By guaranteeing business-to-business transactions currently supported by trade credit insurance, we will help to maintain a vital cog in our economy.”
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The Institute of Export & International Trade welcomed the announced, with the director of stakeholder management Kevin Shakespear saying that: “The continuation of a viable trade credit insurance market is essential for UK businesses and maintaining supply chains.
“For businesses selling in the UK, EU and the rest of the world there are benefits to using trade credit insurance to support payment terms, mitigate payment and country risk and in some instances support provision of finance for both UK and overseas sales.”
As UK-US talks on a free trade deal officially get underway, there’s hope in the SME community that an opportunity arises which will help mitigate some of the damage caused by Covid-19.
Almost 200 negotiators will be locked in detailed discussions, via video call, every six weeks in a deal that could see UK-US trade, already valued at almost £221bn a year, expand massively. The big hope for UK exporters is that tariffs imposed by the US, especially on farming, textiles, food and manufactured goods products, are lifted.
International trade secretary, Liz Truss commented at the commencement of discussions that: “The US is our largest trading partner and increasing transatlantic trade can help our economies bounce back from the economic challenge posed by coronavirus.
“We don’t just want any trade agreement. We want an agreement that will work for small business, an agreement that works for consumers and workers, and an agreement that will benefit all regions and nations of the UK.”
Currently, there are 30,000 SMEs in the UK exporting to the US and Federation of Small Businesses surveys have found that it’s the most important export market for these businesses – 46% saying it’s their key target region over the next three years.
Mike Cherry, national chair of the FSB commented that: “For small businesses, the US is the number one single market of choice for importers and exporters for the next three years, which is why these negotiations are so critical. With our economy likely to be suppressed for some time, we are going to need small businesses that trade to lead the way.
“Small businesses are already the backbone of the UK’s domestic economy. And especially in these difficult times, we now need to see their share of global trade start to catch up. We can do this by putting SMEs front and centre of all new trade agreements.
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“Securing a pro-small business free trade agreement, which includes a comprehensive and dedicated small business chapter, will be essential to addressing the needs and distinct challenges that small firms face when engaged in transatlantic trade.”
Enterprise Ireland has launched its UK Local Authority Report following working with Go Exporting to produce and provide the research and overview.
The report outlines the 353 UK councils, their structure and the opportunities they present for Irish companies.
See below for a snapshot of the report.
Enterprise Ireland is the Irish Government’s trade and innovation agency, supporting innovative Irish companies through all stages of their growth and creating connections to international customers.
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Full access to the report can be garnered by contacting one of Enterprise Ireland’s UK market advisors.
