New Approach Needed As Exports Fall

Reacting to the latest trade data from the ONS, William Bain, Head of Trade Policy at the British Chamber of Commerce, said:

“It is disappointing to see that April’s improved goods export performance was not sustained into May.

“While exports of financial, IT and business services are holding up well, and are now finally above pre-pandemic levels, the picture for goods exports has so far been poor in 2023.

“With firms struggling to increase sales overseas, the recommendations in our newly launched Trade Manifesto have never been more relevant.

“We need to see an integration of trade, climate and industrial policies, and a reboot of the Export Strategy, led by a performance-focused Exports Council.

“We must also use the range of other levers available to us to drive an export-led recovery focusing on the UK’s competitive strengths and future high growth sectors.”

Detailed Analysis

Goods exports values to the EU slumped by 6.8% in May. Manufactured goods exports were particularly hit (falls in fuels led by lower crude oil exports to Sweden and Germany, chemicals (medicinal and pharmaceutical products), machinery and transport equipment and material manufactured goods).

Overall goods imports volumes rose by 5.9% in May, after removing inflationary effects, principally due to higher car imports from Germany to manage supply chains. Goods exports volumes fell by 3.2%, with declines in both EU (4.9%) and rest of the world (1.5%).

For the EU, goods imports volumes, excluding inflation, rose by 4.1% (largely down to higher car and machinery equipment imports, offset by lower fuel imports, particularly refined oil from the Netherlands).

Non-EU goods exports fell by 2.1% in May (led by falls in fuel exports) but non-EU goods imports volumes, after removing inflation, rose by 8.3% (led by machinery and transport equipment).

Services trade continued to be the most positive story with export volumes holding up well. Excluding inflation, they rose by 0.5% and imports by 0.9% in May – broadly in line with the previous month’s data. Services exports are finally above pre-pandemic levels – higher by 3.4% in value terms than early 2020.

Deficit

The UK trade deficit rose during May but narrowed to £18.2bn in the three months to the end of May. Removing the effects of inflation, it fell to £12.2bn by the end of May. The trade in services surplus rose by £0.3bn to £36.5bn in the three months to the end of May.

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