UK Goods Trade Struggling For Impact

Responding to the latest ONS Trade figures published this morning, William Bain, Head of Trade Policy at the British Chambers of Commerce, said:

“The first quarter of 2024 shows the challenges UK goods exporters face, with a further drop in sales to both EU and non-EU markets, despite a brighter global economic picture.

“Services remain the good news story on UK export performance, with travel and other transport provisions, providing the impetus for a decent 1.1% increase across the quarter.

“But we need further action from policymakers to reverse recent declines in trade in goods. This means a focus on digital trade and more efficient customs processes to cut costs.

“Other steps include removing some of the trade frictions with Europe, completing free trade agreements already underway, and working with business to get more value for exporters out of our existing deals.

“The ONS analysis of the lack of an impact from Red Sea disruption is interesting. It would appear, the effects upon shipping markets and supply chains have been effectively absorbed.

“But if re-routing via the Straits of Hormuz and the Cape of Good Hope becomes the new normal there still remain questions for the long-term effects, including upon consumer prices, on sea freight from Asia to Europe.”

The UK Trade Picture In Detail

Goods Imports

Overall goods imports volumes were down by 2.8% (£1.1bn) from February to March. Imports from the EU fell by 5.3% (£1.2bn). This was caused by lower transport and machinery imports (ships from Italy, aircraft from France). Non-EU imports volumes fell by 0.6% (£0.1bn) driven by lower fuel imports from the US and Kuwait, although car imports from China and aircraft imports from the US both rose.

Goods Exports

Export values to the EU fell by 3.5% (£1.6bn) during Q1 2024 after removing inflation – the main declines being in machinery and transport equipment (cars to Turkey and mechanical machinery to Germany), and material manufactures exports. Non-EU goods exports fell by a lower amount – 1.6% (£0.7bn) over the same period, driven by lower fuels (crude oil to China) and chemicals exports (medicines and pharmaceutical products exported to the US).

An overall fall of 0.3% (£0.1bn) was reported for UK goods exports volumes in March, with a 0.9% (£0.1bn) rise in sales to the EU being offset by a 1.4% (£0.2bn) fall in exports to the rest of the world.

Services

In Q1, UK services exports values, adjusted for inflation, increased by 1.1% (£1.3bn) led by increases in travel and transport, offset by declines in construction and other business services exports. Services import values by contrast fell by 0.4% over Q1 2024 – mainly due to falls in insurance, pensions and intellectual property services.

In the month of March, the volume of UK services exports increased by 0.7% (£0.2bn) – the same in percentage terms on values of services exported. Imports of services increased by 0.3% (£0.1bn) on the chained volumes measure, exactly the same as on the value of traded services measure.