Over half of Northern Exporters Boost Q2 sales Despite Global Tensions

British exporters weathered the global trade storm well in Q2, despite sales softening amid a climate of geopolitical tensions.

Latest findings from The UK Trade Barometer show 54% of exporters increased sales to existing markets between April and July. That was down from 63% in Q1.

The Barometer – from the UK’s largest airports group MAG and The Growing Together Alliance of business groups – surveys more than 2,000 businesses about their export performance over the past three months and their expectations for the quarter ahead.

It shows 35% broke into a new market in Q2, compared with 47% in Q1. Looking forward, one in five (20%) expect to enter a new market in the next three months, broadly flat against Q1 (21%).

In the North, 57% of exporters increased sales to existing markets, down from 69% in Q1. The US was the most popular market, with 36% naming it as the territory they grew sales in. That was up from 31% in Q1.

Across the North, 38% entered a new market in Q2, compared with 50% in Q1. America also topped that chart, followed by Germany, Canada, and Australia.

There were differences within the North, though. North West and North East firms fared similarly, with 40% and 42% respectively growing sales to existing markets. In Yorkshire and Humber, the figure was only 20%.

It was North West firms that grew their global footprint the most, with 68% entering a new market for the first time. That compared with 35% in Yorkshire and Humber and 28% in the North East.

The other key findings from the pulse-check, conducted by YouGov, were:

Calming of transatlantic tensions bodes well

• One in four firms already trading in the US (25%) said they had increased sales there in the last three months
• 45% expect to increase exports to America in the next quarter, compared to 41% in Q1 – the joint biggest increase
• But there were huge variances by sector. America dropped dramatically in popularity with manufacturers, while IT and Telecoms sold strongly across the pond

Talking our language

• Canada (Q2: 13% vs Q1: 10%) has risen above the United States (Q2: 9% vs Q1: 13%) as the most cited destination for those expecting to grow their global footprint in Q3
• Australia has also risen up the new market ranks (Q2: 9% vs Q1: 6%), indicating the popularity of English-speaking countries among firms looking to diversify order books

Exporters had Euro-vision in second quarter

• Five EU countries feature in the top 10 markets exporters grew sales to in Q2 (Germany, France, Spain, Netherlands, Ireland, Belgium), compared with just three in Q1 (Germany, France, Spain).
• Five also feature in the list of markets firms expect to enter for the first time next quarter (France, Germany, Italy, Belgium, Spain) vs four in Q1 (Germany, France, Belgium Denmark)

Far East fillip

• There was a strong rise in businesses saying they expect to grow sales to China in the next three months (Q2: 14% vs Q1: 10%)
• The number of businesses saying they had grown sales to China as an existing market also grew (Q2: 8% vs Q1: 7%)
• The number of businesses entering China for the first time also rose (Q2: 6% vs Q1: 4%)

Mind the gap

• 63% of London businesses said they currently export and have increased sales in Q2. That compares with 51% in the North, 51% in the Midlands and 49% in the East of England.
• While 51% of businesses polled in the capital expect to increase sales to an existing market in Q3, less than a quarter do in the North (24%) and Midlands (23%)

If we can make here, we can take it….anywhere

• Just 44% of manufacturers increased sales to existing markets vs 55% in Q1
• The US remained top existing market but with only 16% of manufacturers vs 29% in Q1
• China rose to be the second biggest existing market (Q2: 13% vs Q1: 8%), followed by Australia, Germany and France
• The US plummeted down the table of new markets entered by manufacturers, going from top spot (20%) in Q1 to fifth (3%) in Q2
• China was the most popular new market (8%), despite not making the top five in Q1

Tariff-free trading serves us well

• More than three-quarters (77%) of IT and Telecoms first grew sales to existing markets and 62% entered a new market
• America retained top spot on both measures: 44% grew sales to the US as an existing market (vs Q1: 45%) and 34% entered America for the first time (vs Q1: 36%)

MAG is the UK’s largest group of airports, owning Manchester, London Stansted and East Midlands Airports. Around three-quarters of UK businesses are based within two hours of one of its airports.

CEO Ken O’Toole said: “Last week’s GDP growth figures were met with cautious optimism and a commitment from government to drive productivity and broader economic performance ahead of the Autumn Budget. This global trade data – covering the same period – gives us a valuable indication of how likely we are to see that play out.

“That’s because we know businesses that export are more innovative, competitive and productive. Towns and cities with more businesses trading globally have higher living standards. We also know that the sectors Government is prioritising through its Modern Industrial Strategy are inherently global – reflecting our status as an island trading nation with an economy built on exportable services.

“What this data tells us is that British exporters are navigating global trade turbulence well. More than half grew sales in Q2 and their order books reflect a healthy variety of markets.

“It also highlights a clear opportunity for Government to boost productivity nationwide – and close the gap between London and the regions – by working with business and local leaders to identify the interventions that will help more companies go global.”

The Growing Together Alliance brings together business groups from across the UK regions, including the Northern Powerhouse Partnership. Cambridge Ahead and BusinessLDN, among others.

Henri Murison, chief executive of the Northern Powerhouse Partnership, said: “The importance of the EU as a market cannot be overstated – it remains the most significant market overall when taken as a trading bloc, underlining why the Prime Minister’s efforts to improve that relationship have been so important. 

“Despite the challenges of recent months, the government’s success in securing better terms with the US is already delivering results. Of the businesses that increased export sales over the quarter, more than a third saw growth in the USA – rising to 44% for firms in the North West. 

“Across the regions, trade can and will play a critical role in raising productivity by increasing both the number of businesses that export and the scale of exports among those already active in global markets.”

John Dickie, Chief Executive of BusinessLDN, said: “Amid a volatile geopolitical environment, it’s vital that the Government helps firms in the capital and beyond navigate a challenging outlook by removing roadblocks to trade and investment.

“The recent trade deal with India and the agreement to strengthen cooperation with the European Union are steps in the right direction. As an island trading nation, it’s also important that policymakers back projects to increase aviation and rail capacity sustainably to boost the international links that are the foundation of cross-border business relationships.”

James Monk, Director of Commercial Services at Business West: “The latest UK Trade Barometer data highlights the resilience and adaptability of British exporters, and reflects the activity of our traders in the South West, who continue to take advantage of opportunities in both established and emerging markets.

“With Canada and China rising as key export markets, and the EU maintaining its importance post-Brexit, South West businesses are well-positioned to expand their global footprint and profitability through leveraging Free Trade Agreements.

“At Business West, we’re committed to supporting our exporters in navigating these opportunities, ensuring they remain competitive and compliant in an ever-evolving trade landscape.”

TABLES

Key findings:

UK businesses look-back (last three months):

% of businesses	Top 10 Markets
54% of exporters increased sales to existing markets	US – 32%Germany – 12%Australia – 9%Canada – 7%France – 8%China – 8%United Arab Emirates – 4%Netherlands – 4%Spain – 3%Ireland – 3%
35% of exporters started trading in a new market	US – 14%Germany – 6%China – 6%Australia – 5%Canada – 4%France – 3%United Arab Emirates – 2%Belgium – 1%Brazil – 1%Japan – 1%

UK businesses next three months:

% of businesses	Top 10 markets
27% of exporters plan to increase sales to existing markets	US – 45%Germany – 20%Australia – 17%Canada – 17%France – 14%China – 14%United Arab Emirates – 9%Spain – 8%Italy – 7%Netherlands – 6%
20% of exporters plan to start trading in a new market	Canada – 13%Germany – 11%Italy – 10%France – 9%United States – 9%Australia – 9%Ireland – 8%Belgium – 7%United Arab Emirates – 6%Japan – 5%

Northern businesses look-back (last three months):

% of businesses	Top 10 Markets
57% of exporters increased sales to existing markets	US – 36%Germany – 12%Canada – 9%France – 8%Australia – 8%Spain – 6%Belgium – 6%Switzerland – 5%South Africa – 5%China – 5%
38% of exporters started trading in a new market	US – 22%Germany – 8%Canada – 8%Australia – 5%Austria – 3%France – 3%Switzerland – 2%Spain – 2%China – 2%Saudi Arabia – 2%

Northern businesses next three months:

% of businesses	Top 10 markets
22% of exporters plan to increase sales to existing markets	US – 60%Canada – 24%Germany – 18%France – 16%Australia – 16%Switzerland – 12%South Africa – 9%United Arab Emirates – 8%Belgium – 8%New Zealand – 8%
16% of exporters plan to start trading in a new market	France – 19%Belgium – 17%Canada – 15%Germany – 14%Australia – 14%China – 13%US – 11%Portugal – 7%Poland – 7%Egypt – 7%

Midlands businesses look-back (last three months):

% of businesses	Top 10 Markets
51% of exporters increased sales to existing markets	US – 19%Canada – 8%Germany – 8%Ireland – 8%Australia – 6%United Arab Emirates – 5%Netherlands – 5%China – 4%France – 4%Greece – 4%
29% of exporters started trading in a new market	US – 10%Ireland – 3%Poland – 3%China – 2%Denmark – 2%Finland – 2%Greece – 2%India – 2%Kenya – 2%Netherlands – 2%

• No forward-looking data for the Midlands due to lack sample size

London businesses look-back (last three months):

% of businesses	Top 10 Markets
63% of exporters increased sales to existing markets	US – 28%China – 16%Germany – 15%Australia – 12%France – 11%Canada – 10%Japan – 5%United Arab Emirates – 4%Belgium – 4%Singapore – 4%
45% of exporters started trading in a new market	US – 16%China – 11%Germany – 10%Australia – 8%Canada – 6%France – 6%United Arab Emirates – 3%Japan – 2%Belgium – 2%Spain – 2%

London businesses next three months:

% of businesses	Top 10 markets
51% of exporters plan to increase sales to existing markets	US – 49%Germany – 24%China – 22%France – 18%Australia – 17%Canada – 15%United Arab Emirates – 9%Japan – 7%Spain – 6%Italy – 6%
37% of exporters plan to start trading in a new market	Italy – 21%Canada – 15%Ireland – 15%Germany – 11%United Arab Emirates – 11%Japan – 10%Australia – 9%France – 8%US – 8%Denmark – 6%

East of England businesses look-back (last three months):

% of businesses	Top 10 Markets
49% of exporters increased sales to existing markets	US – 23%Germany – 8%Australia –  8%France – 6%Benin – 4%China – 4%Argentina – 3%Canada – 2%Switzerland – 2%Italy – 2%
37% of exporters started trading in a new market	US – 19%Germany – 9%Australia – 9%France– 6%China – 5%Belgium– 4%Switzerland – 3%Argentina – 3%Denmark – 3% Nigeria – 3%

• No forward-looking data for the East of England due to lack sample size