Weak pound fails to boost UK exporters as growth slows amid deepening Brexit uncertainty

‘Worryingly low’ number of UK firms prepared for shock of no-deal departure, leading business group warns

Ben Chapman
Friday 09 August 2019 15:09 BST
Exporters are 'treading water' because of the government's failure to put an end to deep uncertainty around Brexit, the BCC said
Exporters are 'treading water' because of the government's failure to put an end to deep uncertainty around Brexit, the BCC said (PA)

Nearly two-thirds of manufacturers have reported that fluctuating exchange rates are a worry for their business, as data suggests export growth is slowing despite a weak pound.

A below-strength pound would normally be expected to boost exporters by making goods and services cheaper for overseas buyers but a survey from the British Chambers of Commerce shows export growth weakened in the second quarter of the year.

A balance of +14 per cent of manufacturers said export sales increased in the quarter, down from +24 in the same period last year. In the services sector, the corresponding balance fell to +8, from +17.

Many UK exporters are “treading water” because of the government’s failure to put an end to deep uncertainty around Brexit, the BCC said.

Looking forward, the poll also signals a rapidly worsening outlook. The balance of exporting manufacturers that have increased orders also fell to +9, down from +21 in the same quarter last year. In services, it fell to +5 from +14.

Uncertainty has increased significantly since the April to June period as the prospect of a no-deal Brexit has become more likely under Boris Johnson’s government.

The BCC warned that many businesses are not ready for the “immediate and abrupt” changes that leaving the EU without a deal would bring.

It urged the government to fast-track through paperwork that all UK businesses will need to trade with the EU after Brexit.

A “worryingly low” number of firms have obtained an “Economic Operators Registration and Identification” number (EORI), which is required for customs purposes, the BCC said.

Hannah Essex, co-executive director at the BCC, said: “There is real frustration among business communities across the UK at the lack of clarity about trading conditions after the UK leaves the EU, and we’re already seeing the impact of that uncertainty.

“While the majority of firms want the government to avoid a messy and disorderly Brexit, we’re calling on the government to put practicalities first and implement measures to ensure firms are as prepared as possible for whatever scenario they face. A crucial first step would be to automatically issue all necessary companies with an EORI number to minimise the hoops that firms need to jump through to be ready for day one.

“There are many fundamental outstanding questions relating to the rules and processes of trade in the event of no deal.

“While the Department for International Trade has been working with third countries to ensure the rollover of existing FTAs, many of these critical arrangements have not yet been formally agreed, and firms can’t plan for the future based on warm words. Maintaining preferential access to countries where the EU has trade agreements is critical to maintaining competitiveness in key markets.”

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