George Osborne is set to miss his target of doubling the UK’s exports by 2020 by a vast margin, according to an analysis of data from the Government’s own official forecaster by The Independent.
In his 2012 Budget speech the Chancellor bemoaned Britain’s falling share of world exports and said: “We want to double our nation’s exports to £1 trillion this decade.”
But in what is likely to prove an embarrassment to the Government, underlying forecasts produced by the Office for Budget Responsibility (OBR) alongside the Autumn Statement this week shows the value of exports in 2019/20 reaching just £617bn.
That would be almost 40 per cent lower than Mr Osborne’s target. In a further blow to the Chancellor the OBR’s forecasts also show the UK’s share of global export markets declining over the next five years, despite the ongoing recovery.
Back in 2010 the Chancellor hoped exports would be a significant contributor to GDP growth and help shift the economy away from its reliance on household consumption. But net trade has dragged down the economy every year since 2011 and looks set to do so in 2014 as well.
In pictures: Chancellor George Osborne delivers his Autumn Statement
The OBR’s latest underlying forecasts show this depressing pattern continuing over the rest of the decade, with trade detracting from growth slightly in every year over the next Parliament. Instead, the biggest contributor to growth between 2015 and 2019, in the OBR’s view, will be household consumption. As The Independent revealed yesterday, this consumption will be paid for by households taking on an additional £360bn of unsecured credit.
Ministers have blamed the protracted weakness of the eurozone, the UK’s biggest export market, for the disappointment in overseas sales. Andrew Goodwin, of Oxford Economics, said the recent appreciation of sterling, which makes our exports less competitive in global markets, had impeded growth this year.
Mr Goodwin said his own organisation’s forecasts were a little more optimistic on UK export growth than the OBR, but were broadly in line. “It’s going to be slow growing. We’re going to be dragging ourselves forward, not sprinting ahead,” he said.
In a sign of how rapidly the trade outlook has deteriorated, the OBR slashed its forecast for 2015 export growth this week to 2.4 per cent, down from the 4.7 per cent it expected in March.
The British Chambers of Commerce predicted Mr Osborne would miss his 2020 target earlier this year, saying that the Government was not offering sufficient support for British firms and exporters relative to our economic peers. “We’ve got a Government that is not putting its money where its mouth is” said the BCC’s Director-General, John Longworth.
The Government has taken several trade delegations full of UK executives to big emerging market such as India and China in recent years.
Exports to China last year were up 80 per cent on 2010 levels at a rate of more than £1bn a month, but they have fallen back this year. The UK still exports more to Ireland than the world’s second largest economy.
Exports to India in 2013 were up 40 per cent on 2010 levels, but they are also down sharply so far this year.