British exporters bounce back as sterling sweet spot takes hold

Jasper Jolly
Felixstowe UK's Biggest Container Port
Exports have benefited from weaker sterling (Source: Getty)

British exporters reported a boom in sales at the start of this year as an index tracking non-EU exports reached the second highest level on record.

The balance of manufacturers reporting improved export sales rose to 26 per cent, up from 16 per cent at the end of 2016, according to the survey by the British Chambers of Commerce (BCC) and DHL.

Exporters have been boosted by the fall in the value of the pound since the EU referendum, which remains around 13 per cent below the pre-referendum peak in dollar terms, despite recent rises.

Read more: Export boom for British manufacturers as foreign orders reach six-year high

The rise in non-EU exports has been particularly marked, with the number of trade certificates of origin issued rising by 5.5 per cent in the quarter. In London this was even higher, with a nine per cent increase.

Firms require certificates from their local chambers of commerce to comply with rules of origin in jurisdictions outside the EU, making them a good measure of the intensity of exports.

Exporters have had a bumpy ride over the last year, with a surge in orders before the referendum. After the Brexit vote the volume of documentation issued dipped for two quarters, but the latest increase suggests exporting firms are finding their feet once more, although the survey also finds 31 per cent of firms are still worried about exchange rate fluctuations – a figure that rises to 52 per cent among manufacturing firms.

Separate figures from the Confederation of British Industry (CBI) show exports grew at a record pace in April to reach a six-year high.

Read more: Why a weak sterling can help small businesses export internationally

The rising confidence among exporters confirms findings from the Bank of England, which this week said its agents are reporting a “marked rise in export volume growth”. A pick-up in global growth is also expected to benefit firms selling abroad.

The Bank of England’s deputy governor Ben Broadbent has previously described the current conditions as a “sweet spot” for exporters, with a devalued currency boosting their sales but no impact on trade conditions.

Adam Marshall, BCC director general, said: “Confidence among exporters is strong, which is a timely reminder that businesses are doing their best to ignore the cacophony of political noise around them and focus on the success of their own operations.

“While confidence among UK exporters is high, rising costs, recruitment difficulties, and concerns around currency fluctuations could temper their growth if allowed to continue unchecked. Alleviating the burden of upfront costs and addressing the skills gap would increase productivity, investment and growth.”

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