Sterling volatility is major exporter concern

A national Chamber survey of 2,600 exporters has found that confidence in future operations remains strong, but external economic and political factors are having an impact.

The results show 60% of exporting manufacturers were more concerned about exchange rates in the second quarter of the year than previously. There was also increased concern among 43% of service exporters, highlighting the broad impact of the weakness of the pound.

The findings indicate that price pressures eased slightly on exporters during the second quarter, but manufacturers under pressure to raise prices say raw material costs are the main factor (81%). Service firms say raw material costs (39%) and other overheads (51%) are leading on cost pressures.  An escalating labour shortage is seriously affecting exporters, with 69% of recruiting manufacturers struggling to find staff.

Many exporters are maintaining competitiveness in foreign markets with healthy order books, but sterling’s weakness is increasing the cost of raw materials from abroad.

Key findings

  • 39% of exporting manufacturers saw orders increase in the last three months; for services, the figure was 30%
  • 35% of exporting manufacturers and 32% of exporting service firms expect the price of their goods/services to increase
  • For those manufacturing exporters under pressure to increase prices, 81% report the cost of raw materials as the leading source of pressure
  • 77% of exporting manufacturers and 67% of services firms attempted to recruit in the last three months, however, of those, 69% and 60% respectively reported difficulties finding the right staff.

Dr Adam Marshall, Director General of the British Chambers of Commerce, said:

“It’s been a summer of trade tensions and endless Brexit bickering, and exporters are particularly exposed to the consequences of that turmoil. Companies will always find a way to trade with each other, but messy negotiations and the threat of higher tariffs have implications, and can hit confidence and firms’ bottom lines. The UK government can’t control currency or the actions of trading partners, but it can take steps to mitigate the level of uncertainty at home.”

Ian Wilson, CEO DHL Express UK and Ireland, said:

“The resilience of UK exporters is highlighted with this quarter’s Trade Confidence Index. Despite a slight decline, the index remains up year-on-year and it is encouraging to see it stands at the fifth highest level on record. This strong performance also reflects what I hear from our customers and, at DHL Express, we continue to support an abundance of energetic, internationally-focussed UK entrepreneurs to take their businesses to the world.”