The value of British goods sold to countries outside of the EU increased throughout 2019, according to Lloyds Bank Commercial Bank. The increase helped offset the falling value of UK exports to the continent.
While analysis of the latest trade figures from HMRC revealed that the EU is still the UK’s single largest trading partner, the value of British goods exported to the continent fell from £173.3 billion in the year ending Q1 2019 to £168.5 billion in the year ending Q3 2019, according to the Lloyds Bank International Trade Index.
Prior to this, the value of UK goods exported to the EU had grown consistently since 2016.
The Index, compiled in partnership with IHS Markit, showed that the UK sold £177.1 billion of goods to markets outside the EU in the year ending Q3 2019, up from £170.9 billion in the year ending Q1 2019.
Accounting for the trend, the report shows over the last three years, UK exports to Asia and the USA have grown at a compounded rate of 11.3% and 7.7% respectively, while new exports orders to the EU grew by just 6.9% per year.
The value of British exports to the UK’s top 10 markets in Asia grew over the same three-year period. Whisky and spirits exports grew rapidly, with sales to Vietnam and India increasing by 204% and 73% respectively.
The Lloyds Bank International Trade Index also found economic contraction in Europe contrasted with the performance of countries outside the EU in the final quarter of 2019, highlighting further opportunities for UK exporters in far-away markets in 2020.
According to IHS Markit PMI data, the economies of Germany and the Netherlands – two of the top five destinations for UK exports – softened for the first time in over six years.
Germany’s PMI for Q4 2019 was 49.7, down from 50.3 in Q3, while the Netherlands saw an index of 48.5 in Q4. Weaker economic conditions were also recorded in Italy, Austria, Poland and the Czech Republic (49.8, 46.8, 45.9, 44.8). A reading of above 50 indicates growth, while one below 50 signifies a decrease.
Meanwhile, economic growth was measured in the USA (51.9) and China (52.6), and across Asia (51.1) between October and December.
Gwynne Master, managing director and global head of trade for Lloyds Bank Global Transaction Banking, said: “It’s encouraging to see that UK exporters aren’t limiting themselves to markets close to home. The fluctuating economic environment could prompt more businesses to take advantage of a diverse range of overseas markets, which in turn will hopefully enable increased sales and revenue for UK exporters.
“Last year, tension between the world’s biggest economies undoubtably had an impact on global trade. Productive talks and a new deal between China and the US signed last month could represent the start of this tension dissipating, creating further opportunities for UK exporters.”
The Lloyds Bank International Trade Index brings together export growth and supply chain indicators to provide timely insights into the challenges and opportunities for UK exporters.