Exports fell in August, but firms are still looking for growth

UK goods exports fell by 2.2% between July and August 2023. This was driven by a drop in exports to non-EU countries, while EU exports remained flatter. The decrease in non-EU exports was mainly a result of a decline in chemicals exports to the US, and lower exports of cars to the US and China.

Perhaps more significantly, when measured in chained volume terms, which removes the impact of inflation, the data shows goods exports fell by 4.6% from July to August, with a 7.2% drop in non-EU exports and a 1.8% drop in EU exports.

In terms of services, the picture was more stable. There was no change in exports of services from July to August in chained volume measures.

Meanwhile, our own indicator on member expectations for exports over the next 12 months looks more optimistic. In August, more members who export are expecting their levels of exports to rise (32%) in the coming year than fall (11%), giving a net positive outcome of 21%. However, much like the ONS data suggests, the majority of members are expecting a flat year, with 56% anticipating no change.

The evidence suggests that while businesses are looking for growth, UK exports are feeling a bit sluggish, as the international trade environment continues to be somewhat hampered by barriers relating to Brexit, global political pressures and the UK economic situation.

At the IoD, we feel there needs to be a better sense of what this data should be saying when export levels are where they should be, i.e. how do we know when we have reached ‘good’?

The government currently has a target to reach £1 trillion worth of exports by 2030 in current prices, which doesn’t have a lot of meaning when considering the impact of inflation, which would naturally carry us to the goal without any real change to policy.

So, we are proposing two targets for the government to give them a realistic end goal to work with: 1. A chained-volume target of £900 billion of exports in 2019 prices by 2030

2. A target of 15% of all business exporting either goods or services by 2030, up from the current figure of 11.4%

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