The latest GDP figures are encouraging. But with the UK’s improving competitiveness, why aren’t British businesses exporting more? We have been importing more than we export for nearly 30 years. More particularly, this is a deficit in goods. In services, we enjoy a surplus of some £70 billion; in traded goods our deficit is £100 billion. And where we export to is also imbalanced: just 4 per cent of our exports go to the huge, growing consumer markets of India and China.
The good news is that HSBC forecasts that UK export growth to Asia over the next few decades will be an average 9 per cent a year compared to just 4 per cent to Continental Europe. Half of this growth to Asia is expected to be in industrial machinery and transport equipment, with UK chemicals and pharmaceuticals “managing to remain internationally competitive by innovating new products, improving quality and driving up efficiency.” This is important as we have become over-reliant on exporting to traditional markets in America and the EU.
However, in the current world exports league, Germany is 2nd only to China. The UK is 12th – having plummeted from 5th place just a decade ago. This leaves us firmly behind smaller EU members, such as Belgium and the Netherlands. In fact, our exports in goods have grown by an average of just 2.8 per cent over the last decade, slower than both France and Germany. Whatever problems may be associated with EU regulation, it’s not stopping other Member States from exporting. This points to a domestic exports challenge: one that is an urgent priority to address.