UK Edition
Almost a fifth of UK exporters have shifted trade away from the EU since the Brexit referendum as they “forge new opportunities around the world”, research shows.
The growth in value of exports to EU countries fell by an average of 8.7pc annually over five years, according to analysis of 340,000 quarterly export transactions of 26,000 British exporters by Aston Business School.
Gwynne Master, global head of trade for Lloyds Bank, said: “While the clock is counting down to the end of the UK’s post-EU transition period, British businesses are building toward the future and forging new opportunities around the world. These findings are the start of a new chapter in the story of global British business and trade.”
An estimated £50bn of exports have been diverted since June 2016 primarily to Brazil, Russia, India, China, South Africa – the so-called Brics economies – and to countries with which the UK has strong ties, including Commonwealth members such as Australia and New Zealand.
Professor Jun Du of Aston Business School said the data undermined the traditional "trade gravity" model, which assumes geographically closer countries trade more.
The Trade Secretary Liz Truss announced in September that she had drafted in a team of experts, led by Professor Tony Venables of Oxford University, to advise the chief economist of the Department for International Trade (DIT) on how to adapt its trade gravity model to focus more on trade in services, including digital and data.
“Our concern lies with the vulnerabilities faced by businesses that export less, forging these paths while lacking the infrastructure and scale of multinational firms as this reverse in trade gravity typically means higher costs and greater risk exposure," Professor Du added.
Separate polling of 1,200 British businesses in October also found that 24pc had reviewed and changed their supply chains because of Brexit, with 26pc diversifying outside the EU and 13pc stockpiling to ensure continuity from Jan 1 after the UK leaves the single market and customs union.
It came as analysis by the Office for National Statistics likewise showed that the proportion of goods imported from outside the EU rose from 45.6pc in the second quarter of last year to 47.3pc in the second quarter of this year.
A DIT spokeswoman said: '“UK exports are performing strongly, and last year we were the only top-10 exporting nation to see its overseas sales increase. Our recently launched £38m Internationalisation Fund for small businesses will go further to support this trend, helping up to 7,600 small and medium-sized enterprises in England grow their overseas trade.
“We have already signed continuity trade agreements with more than 50 countries. Through these and our new trade negotiations, this government is laying strong foundations for exporters to thrive in the high growth markets of the future.”