UK export growth has fallen perilously close to the point of contraction in the first quarter of 2019, according to the latest European Export Index report by accountants and business advisors BDO LLP.
BDO’s Export Growth Index for the UK fell by 0.8 points to 95.6 in Q1 2019, its joint weakest performance since Q1 2016, and just 0.6 points short of contraction. The report indicates that further disruption is expected later this year which will result in continued UK export decline.
German export growth also slowed due to weaknesses in the global automotive industry as car sales continued to stall in key markets. BDO’s Export Growth Index for Germany fell for a fifth consecutive quarter to 96.0 in Q1 2019.
Dismal figures from the UK and Germany are consistent with a broader slowdown in export growth observed across the EU, with BDO’s EU Export Index shrinking from 99.0 in Q4 2018 to 97.5 in Q1 2019. This sharp decline is reflected in global air freight data from January, which was down 1.8% on the level recorded in the same month last year, marking the fastest rate of contraction in three years. Air freight data from Europe was worse still, showing a 3.1% year-on-year demise.
The French economy bucked the trend witnessed across Europe, exceeding expectations to become the top performing exporter among the EU’s five largest economies. The Export Growth Index for France rose by 1.7 points to 101.0 in Q1 2019, and it is expected that output will hold up to end of Q1 as political unrest continues to cool.
Commenting on the findings, Peter Hemington, Partner, BDO LLP, says: “It is troubling to see UK export growth creeping close to entering negative territory, with the strain of political and economic turbulence across Europe taking its toll.
“Future trade deals with the US, China and India will be key to unlocking long-term economic opportunities for UK businesses as Britain leaves the EU. But given the close economic, political and social ties Britain has with Europe, the degree to which both sides can implement arrangements which minimise disruption and avoid a dramatic severing of these links will be critical in shaping the short-term economic outlook.”