Jack Simpson looks at the Regional Trading Figures for 2018's third Quarter, which highlighted an alarming, but unsurprising, decline in North Eastern trade.
Last week, HMRC released the regional data for international trade. Unfortunately, it was a Quarter of decline for North Eastern traders. Exports for the region totalled £3.16bn for the quarter, down 6.75%, but crucially down 0.4% on the year. This may seem small, but is unusual for exporting figures to be down on the year, and may indicate hesitance in the regional global activity.
There is cause to worry about the continued decline of exports to the European market, down 9.7% on-quarter, now standing at £1.8bn (worth 57% of total exports). Though not our worst recent Quarter for EU exports, it is rarely down on the year. For context, Asia & Oceania was our second highest market at £420m (worth 13% of total exports), down 3% on Q2. This is a gulf of £1.4bn, as we pioneer a Global Britain, Government must not forget the strong and prosperous relationship the North East has with the EU.
Exports to the European Union continue to decline from Q1 2018
The figures show the EU is clearly our most important market, and losses here are not being recovered elsewhere. Yet with 100 days to go, business are still no clearer on the final Brexit deal, and this uncertainty is most likely deterring business activity to the region, reinforced last week in Government's delaying the crucial Brexit Withdrawal vote. Business must be given the certainty and confidence to trade with our European partners.
Only two markets posted positive growth, in the North
East. Sub-Saharan Africa grew by 27% to £47m, while exports to Latin America
were up 17% to £75m. Yet, these gains are dwarfed by the £196m decline in
European trade. As the graph below shows, these are fairly inconsistent
markets, suggesting more bespoke than constant orders.
Latin American (Blue) & Sub Saharan (Red) markets show growth, but no consitency
Despite an 11% drop, Machinery & Transport are still the top North Eastern exports, worth £1.8bn. Apart from Brexit, the new emissions tax and overspill from the US-China trade battle could be factors in this slump. There was growth in the second top export, Chemicals, of 2.4%, to £714m, with the EU, and those two growth markets, Latin America and Sub-Sahara, seeing the increase.
Chemicals (Red) have grown in Q3, but Machinery & Transport (Green) leads the way despite decline.
Imports were also down £70m to £3.4bn (-2%), giving a trade total of £6.61bn, and a trade deficit of -£286m. Trade deficits are not always a bad thing, as it includes the consumables brought in (French Christmas Wine for example), and even indicates a swell of resources needed for expansion.
Exports (Blue) v Imports (Red)- Trade deficit grows for Second quarter running
The figures are contrast to the record postings of the first and second quarter. While the downturn in regional trade isn’t surprising, it is alarming. Our Quarterly Economic Survey results released last month reported less international activity and cited Brexit uncertainty as a key reason behind this. We will see in the fourth quarter (stats due: 7th March ‘19) whether this is a blip or the start of a trend.
On a positive note, 2,073 North East exporters averaged £1.4m value per exporter, well above the national average of £941k. While this is a great statistic, I believe this could still be higher. The Future Export Strategy identified that 49% of business could export more, but don’t, yet rather than ease the burden on exporters, the Strategy placed further burden on them.
Increased funding and on the ground personal support for business, coupled with a data platform to link opportunity with business, as well as a relevant market contact, is just one-way Government could look to bolster the regions global trade.
It is unclear what the end of year will look like (Q4), stockpiling strategies on both sides of the Chanel in the build up to Brexit could result in a increase for imports and exports. However, the lack of certainty could deter global trade, meaning trade will either level off or slump further.
However, the Chamber will always look to champion regional trade, and we have great workshops in 2019, including with HMRC, to help new and existing global businesses with the new Customs Declaration Service, AEO Status and Processing (Follow links for respective event). But on that note, have a great Christmas and New Year!
All tables and figures taken from: https://www.uktradeinfo.com/Statistics/RTS/Pages/d...