Ernst & Young ITEM Club – The outlook for UK exports - .PDF file.
UK exports are predicted to enjoy a period of growth, according to a report from the Ernst & Young ITEM Club — The outlook for UK exports.
This will be driven by exports to so-called BRIC (Brazil, Russia, India, and China) countries and an improvement in competitiveness brought about by a weak pound.
The total value of UK goods and services exports will increase by 8.5 per cent a year over the next 10 years, according to ITEM, with the total value of UK goods and services into the BRIC countries to increase by 11.7 per cent a year to 2020.
Following a period of negative growth over the last two years, when the total value of goods and services exported overseas dipped by -1.8 per cent a year, opportunities to increase the UK’s market share in traditional strongholds, such as Europe and the US, are also likely to increase in value by 7.8 per cent and 8.6 per cent a year respectively — boosted by the steep devaluation in the pound over the last three years.
Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club, believes that these positive factors should mean that net exports contribute around 0.5 per cent a year to GDP growth over the next five years.
The forecast implies some significant structural shifts for the UK, driven by export re-orientation towards emerging markets and competitiveness. The UK has been slower than its competitors to penetrate the BRICs so far, but recent trade figures suggest that the UK’s reorientation towards these countries has now started in earnest.
Five per cent of UK exports currently go to the BRIC economies and ITEM is urging the UK government to continue engineering policy towards supporting competitiveness.
‘The government has an important role to play in facilitating the re-orientation of exports towards emerging markets and breaking down the regulatory barriers for companies that wish to break into those countries by developing strong relationships with their governments,’ said Goodwin. ‘Government policy should also be focused on supporting competitiveness through improving skill levels and providing incentives to invest, which would help to close the productivity gap with Germany.’