The majority of English regions and Wales are experiencing a decline in their share of manufacturing exports to the EU, indicating a potential shift in the UK’s trade patterns, according to a recent report by Make UK and accountancy firm BDO. The analysis of official data reveals that the UK’s overall share of manufacturing exports to the EU increased from 50% in 2019 to 52% in 2022. However, this growth can be attributed to significant increases in exports from Northern Ireland and Scotland. Without these regions, the UK’s share of goods exports to the EU would be on a downward trend.
Northern Ireland benefits from a unique position that allows it to retain access to the Single Market for goods, as well as trade freely with the rest of Great Britain. Meanwhile, Scotland’s exports to the EU were boosted by the oil and gas sector and its supply chains amid the ongoing Ukraine crisis.
While the share of goods exports to Asia & Oceania and North America has remained relatively stable at around 16% since 2019, this suggests that UK manufacturers are exploring opportunities beyond their traditional markets. This trend has significant implications for the UK government’s export support policies. If the share of trade with the UK’s closest and most important market is declining, businesses will undoubtedly look for opportunities elsewhere. Make UK is calling for increased export support, particularly for SMEs, and changes to existing structures to facilitate exports to countries outside the EU.
Verity Davidge, Director of Policy at Make UK, emphasizes the need for efforts to improve the existing agreement with the EU and reduce trade barriers. However, she acknowledges that UK trade patterns may be gradually shifting as companies seek opportunities in other markets. This shift underscores the importance of aligning government policy with these changing dynamics.
Richard Austin, Head of Manufacturing at BDO, highlights the combined impact of Brexit, the pandemic, and the Ukraine war on the UK’s manufacturing regions. He warns that the regulatory burdens, supply chain pressures, and rising costs risk permanently undermining the competitiveness of UK goods.
The analysis also reveals that only London & the South East and the East of England have seen their share of goods exports to the EU increase since 2019. In contrast, all other English regions and Wales have experienced declines. Northern Ireland’s share of exports to the EU increased from 59% to 64%, while Scotland experienced an even sharper increase from 50% to 59%. The South West had the lowest share of goods exports to the EU in 2022 at just 42%.
The analysis further highlights a divergence in exports to North America and Asia & Oceania across different UK regions, likely influenced by sectoral strengths and the diversification of supply chains. For instance, the West Midlands saw a significant portion of its exports (24%) go to North America, driven by automotive-related exports. Wales, on the other hand, had a higher proportion of exports (19%) going to North America, mainly linked to the aerospace supply chain.
To boost exports, especially for SMEs, Make UK recommends extending the geographical reach of the Export Support Service (ESS) to include all key UK export markets, rather than limiting it to the EU. The organization also suggests tailoring grants and practical support programs to align with export market priorities and demands. Additionally, there is a need for a bespoke financial package within the Export Academy to enhance exporters’ skills and knowledge. Make UK emphasizes the importance of company-level exporting strategies and advocates for the development of partnerships to build expertise in trade.
In summary, the analysis by Make UK and BDO highlights a potential shift in the UK’s trade patterns, with the majority of English regions and Wales experiencing a downward trend in their share of manufacturing exports to the EU. This trend underscores the need for enhanced export support for businesses, especially SMEs, including changes to existing structures to facilitate exports to non-EU markets. The report also emphasizes the importance of ongoing efforts to improve the existing agreement with the EU and reduce barriers to trade.
