Improving UK export performance

November 2015

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Executive Summary

UK exports: a story of failed ambition and declining market share.

In 2012, setting out his ambition to double UK exports to £1tn by 2020, the Chancellor threw down a gauntlet to British exporters.

At the current time there appears almost no chance the UK can achieve this. UK export values have stayed relatively flat over the last three years, and the July 2015 OBR and EY ITEM Club forecasts suggested that £630 to £650bn is a realistic 2020 range for exports.

The failure to achieve this target should come as no surprise.

The story of UK exports is one of continued long-term decline in world market share. In 1950 the UK accounted for 10% of world exports, but this had fallen to 3% by 2009. Other developed countries have also lost market share, but not at this rate.

Unsurprisingly, given the scale and complexity of export markets, the headline performance numbers do not tell the full story:

  • There is a significant difference in the performance of goods and services. The UK is a world leader in services, and the value of services exports has grown at the same time as our balance of trade in goods has deteriorated.
  • The UK has also very successfully attracted foreign direct investment, winning the most projects in Europe every year for the last decade, but we have seen earnings from overseas direct investment decline in recent years.

Understanding the real drivers of trade performance is the first step to developing ideas on how to improve the UK’s position.

To help facilitate a debate on the best way forward, EY, with input from the British Chambers of Commerce (BCC), has developed this report for the BCC’s International Advisory Council. Following feedback from the IAC, we have developed a set of focus areas to improve export performance.

The report includes elements of published studies undertaken by the EY ITEM Club since 2012, and presents EY’s interpretation of EY ITEM Club’s work. Where we consider it useful, we have reproduced elements of EY ITEM Club studies. Although some of the research is two to three years old, we believe the findings and conclusions are still valid.

The report includes:

  • Economic analysis of the drivers of UK exports
  • Comparison of UK goods and services export performance
  • Identification of future growth opportunities
  • Analysis of requests for support by business and policy proposals
  • A suggested agenda from EY for improving export performance.

The report draws extensively on the EY ITEM Club’s work, other EY commissioned work, including some as yet unpublished forecasts, and BCC’s research.

Contact

EY - Mark Gregory

Mark Gregory

EY Chief Economist