Reaction to Office for National Statistics figures
Reaction to ONS trade figures as Bank Governor address Chamber members
Latest trade figures from the Office for National Statistics show that international trade faces a challenging year ahead. With no economic growth in the final quarter of 2022, the UK is still expected to enter recession this year, despite that not yet happening.
Today’s economic briefing by Bank of England Governor Andrew Bailey to a joint Chamber-BoE audience was attended by more than 100 business representatives from West & North Yorkshire. As expected, questions came thick-and-fast due to the prolonged period of uncertainty, and the Chamber continues to lobby policy-makers for the best possible measures to support business.
Reacting to the ONS trade figures for December 2022, William Bain, Head of Trade Policy at British Chambers of Commerce, said:
“UK exports were flat in December 2022 and fell across the final quarter of the year as a whole. Across 2022, export values rose by 6.7% (excluding inflation) but were still 3.1% lower than in 2018. The UK trade balances in goods and services fell sharply in 2022 by £85bn to £108bn, compared with the previous 12 months, but a major factor was the surge in fuel imports throughout the year due to the impact of the War in Ukraine on global energy supply.
“The increase in UK export values for the year is testament to the efforts of businesses and Chambers amid exceptional cost, energy and supply pressures. But we still have some way to go before we get back to where we were in 2018. Although trade in services was broadly flat in December, goods imports out-performed goods exports, which finished 2022 with a small decline in December.
“Of greater concern is the picture across the final three months where, on the current prices measure, UK exports fell by 4.5%, with declines in both EU and non-EU exports. The new Department for Business and Trade must be laser-focused on improving export performance over the coming months and we look forward to helping them do that. But the data for the last quarter shows the scale of the task ahead.
“The UK Government’s Export Strategy needs to fire on all cylinders this year to support SME exporters to grow their exports or sell goods and services to new markets for the first time.”
Analysis of the data
Removing the effects of inflation, total UK goods exports fell by 0.3% in December 2022 (2.3% drop in export values before inflation effects are accounted for). An increase in exports to the EU of 4.9% (driven by higher machinery and transport equipment exports) was offset by a fall in rest of the world exports by 5.1%.
There was a better story on goods imports with an increase (excluding inflation) of 1.5% in December 2022 (2.9% before removing effects of inflation). Rises were 3.8% for EU imports driven by rises in machinery, transport equipment and fuel imports, and 1.9% for imports from the rest of the world, predominantly due to soaring prices of gas imports from the US and Norway in December.
In services, excluding inflation, imports rose by 0.3% while exports fell by 0.4% in December. Across the final quarter of the year, on current prices, goods exports fell by 4.5%, at a higher rate than goods imports which fell by 2.1%. UK services exports fell by 1.5% over the same period, and services imports to the UK by 0.2%. Overall, UK exports across the quarter fell by 2.9% on current prices.