By Daniel Hunter
The fifth DHL/BCC Trade Confidence Index, a measure of the UK’s exporting health, reveals that expectations for the ‘super summer’ of 2012 has been overshadowed by the Eurozone crisis and concerns around currency fluctuations.
The report, which draws on a survey of over a thousand exporters and an analysis of export documentation (required of all companies exporting goods outside the EU) found that 40% of firms stated that exchange rates were a concern, showing the Eurozone crisis’ impact in terms of UK competitiveness and the buoyancy of one of its biggest markets.
A net balance of just +21% of firms felt profitability would increase in the coming 12 months, down from +30% the previous quarter, with falling profitability expectations across all firm sizes.
These results were in spite of a summer of celebrations and high hopes for the economic impact of the summer on exporters. They are in stark contrast to research conducted in 2010 by DHL, which found that 56% of businesses anticipated that the focus on London over this period will create greater global demand for British goods.
However, the latest Trade Confidence Index showed an increase in the number of firms reporting an increase in export orders, up from +39% in Q1 to +49% in Q2.
“SMEs’ concerns around exchange rates and profitability highlight that there is still more to be done in terms of support for British businesses who are venturing into overseas markets,” Phil Couchman, CEO of DHL Express UK and Ireland said.
“But recent export figures are strong, and there is reason to believe that the “super summer” – a once in a lifetime opportunity that will put British businesses firmly in the spotlight – could present a fantastic opportunity to make inroads internationally.”
“To sustain momentum, businesses large and small should start thinking now about how best to serve this international audience once the events are over, by initiating an export programme for their goods and services to reach that target market.
“The worries highlighted in the report show that businesses should seek advice from professionals with a local presence who can provide specialist insight.”
John Longworth commented:
“Business concerns about the Eurozone have increased in the last quarter, and it’s no wonder. In the last few months we have seen two General Elections in Greece, a bailout of Spanish lender Bankia, and sovereign borrowing costs creeping up to dangerously high levels yet again.
“But there is a silver lining. Businesses have seen an increase in export orders in the last quarter, despite concerns about the Eurozone. While the EU is our main trading partner, UK businesses are looking to trade in new markets. According to the latest figures from the Office for National Statistics, more than half of British exports in the three months to May went to countries outside the EU, an increase of 13% on the same quarter last year.
“These results are encouraging, but we need to find ways to make our businesses think global, and provide them with the support they need to break into new markets. Businesses are still concerned with being able to access the appropriate finance to help them to break into new markets. Export growth is vital, not only to help to boost the UK economy, but to show the world that Britain remains a major global competitor and a nation to do business with.”
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