International Trade UK Exporter Monitor: Large UK exporters take a hit

UK exporters are feeling the pinch, with the largest businesses appearing to have been the most severely affected. There are nearly nine percent fewer of them exporting in February 2022 compared to a year ago. This is according to the latest UK Export monitor from the Institute of Export & International Trade (IOE&IT) and Coriolis Technologies.

The export revenues of large UK firms fell by around 12.4 percent in January compared to a 0.3 percent drop in medium-sized businesses’ revenues. Small companies were also severely affected with a decline of over 16 percent in revenues, which has directly impacted their budgets, but fortunately not their broader operations. This is a direct consequence of disruptions to supply chains in the early part of 2022.

The beginning of 2022 saw imports from Europe subject to the same customs declarations as exports. There were five percent fewer exporters compared to twelve months ago, their number of employees has fallen back by nearly 5.5 percent and their revenues by almost eleven percent compared to a year ago.

The effects of a shift in how exporter numbers were calculated in February 2022 have now worked through the data, so the year-on-year comparisons are a good reflection of the impact that the changes have had on the export sector over the past twelve months.

Trade conditions for exporters remain challenging across the UK nations, although Scotland appears to have fared better than the rest of the UK over the last month. The analysts expect a mild uptick in March across all UK nations, but the effects of the supply chain disruption and the new trading relationship with Europe are still bring working through. “In addition, as we start to see the impact of the Russia-Ukraine crisis, we expect substantial downside risk to the more positive outlook over the next two months,” the experts from IOE&IT predict.

Institute of Export & International Trade director general, Marco Forgione said: “This month’s export monitor serves as a timely reminder that businesses of all sizes in the UK need help and support to keep goods flowing in and out of the country. The past twelve months have been a learning curve for importers and exporters alike, adapting to the changes in the UK’s trading relationship with Europe. It is clear that there are macro issues which have disrupted the UK economy and businesses’ ability to reshape their supply chains and market development.

The findings in detail:

Despite the increase witnessed last month, all nations have seen a decline in the number of exporters during February. This brings the total number of exporters to 61,005, which is fewer than this time last year at 61,526, and the lowest the number has been since January 2021.

Exporter employment since last month has generally followed this decline for England and Northern Ireland. There was a minor increase for Wales and a substantial increase for Scotland, climbing from 684,304 to 760,322 minus eleven percent increase overall. Scotland’s exporter employment is higher than it was last year, but this is a different story for the UK in general with exporter employment numbers at 13,652,341, a 4.6 percent drop since last month and the lowest it has been since January 2021.

The UK has seen a 9.3 percent decrease in the total revenue generated by exporting businesses over the last twelve months with a drop from 5.2 billion pounds to 4.7 billion pounds. In line with this, no nation performed better in February 2022 than February 2021. Northern Ireland experienced the biggest decrease of 13 percent, whereas Scotland was the most resilient with only a 4.9 percent drop.

The twelve month moving average number of exporters fell back in February 2022 by -5.09 percent. This compared to an increase of over 69 percent in the number of exporters in the twelve months to January 2021. However, the growth in the previous year was distorted by a re-calculation of the way in which UK tax authorities collected data about exporters from the UK to Europe. Exporters to Europe were included from February 2021 thus the jump between January and February is included in the data for 2021.

The number of employees in UK exporting businesses fell by 5.41 percent. This compares to an increase in employment for the twelve months to February 2021 of 45.18 percent. Again the figures for the twelve months to February 2021 are distorted by the UK Customs and Excise changes in data collection.

The amount of revenue generated by exporting businesses fell by 10.73 percent in the twelve months to February 2022. In the twelve months to February 2021 revenues increased by 29.21 percent which is proportionately less than the increases in the counts and employment of UK exporting businesses. This suggests that the profitability of businesses of all sizes has been affected by the events of the last two years.

The experts expected this drop in the twelve month moving average, although it is slightly larger than the four percent we predicted in January. This suggests that the effects of import delays in January did impact exports in February. The analysts are expecting a mild pick up in the numbers of exporters and revenues in March but for employment to continue to contract by over six percent accounted for by large businesses in particular.

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