UK outperforms both Germany and France’s export growth for five consecutive quarters
Service sector is major driver of UK export growth, amounting to £63.7bn worth of trade in Q1 and growing 8% year-on-year
The UK’s export growth has outperformed both Germany and France for five consecutive quarters, according to BDO LLP’s latest European Export Index – which tracks the export performance of the five largest European economies and the European Union every quarter.
Though it has dropped from 109.4 in the first quarter of 2017, the UK’s export Index (104.4) is growing at a faster rate than that of Germany (103.3) and France (99.2), which increased from 100.7 and decreased from 99.3 respectively on Q1.
Manufacturing was the biggest driver of export growth in the UK, with manufacturing rising by 1% month-on-month and 3% annually, while the food and drink sector witnessed a 8.3% annual increase in export value in the first quarter of the year.
Service exports were another major driver of UK export performance in Q1; growing 8% year-on-year and accounting for £63.7bn worth of trade over the period. However, the report warned that, with the current domestic slowdown in the services sector, strong services export performance will become even more vital to UK economic growth.
Additionally, although the UK is ahead for export growth, German exports have grown 5.5% year-on-year and are expected to gain more momentum, with export growth of 8.1% predicted for Q2. Germany’s manufacturing sector – the largest of any nation in Europe – is enjoying strong demand and could overtake the UK in the second half of the year.
Peter Hemington, partner at BDO LLP, commented:
“UK exporters have significantly outperformed their EU counterparts since the referendum last year. They were quick to realise the opportunities the currency devaluation offered in the global marketplace.
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“However, the future trading conditions for UK businesses are uncertain. There is a new government in place, little clarity on the Brexit deal and a services sector that is grinding to a halt, UK exporting performance could quickly be overtaken by Germany and France.
“The new government needs to reveal its position on Brexit immediately, so UK exporters and importers can best prepare for the changing trading conditions with the European Union and the rest of the world.”