The growth in British exports will slow next year as protectionist measures take their toll, in spite of a weaker pound boosting competitiveness, according to research published today.
UK exports will increase by £20bn in 2018, slower than the £50bn predicted for 2017, according to forecasts from trade credit insurer Euler Hermes.
The chemicals industry, machinery and equipment and jewellery and precious metals are expected to enjoy the biggest increases for merchandise exports over the next year.
Read more: British firms fear rise in protectionism
The slowdown in export growth comes against the backdrop of global trade expansion moderating and a rising toll from increasing protectionism.
Global trade volumes are predicted to rise by 3.9 per cent in 2018, down from 4.3 per cent for this year and only half the annual growth rates of around eight per cent which were the norm before the financial crisis a decade ago.
Meanwhile, some 400 new barriers to trade will be set in place by the end of the year, with 87 protectionist measures from the US alone, Euler Hermes said.
The US imposed 84 protectionist measures in 2016, while figures from Global Trade Alert show the rate of new measures acting as trade barriers has slowed since peaking around 2012 and 2013. That has contributed to a slower flow of cross-border credit from banks.
For the UK, a cheaper pound will not sustain a fast pace of export growth, Euler Hermes said.
Some business surveys, notably including those of the Confederation of British Industry (CBI), have shown a strong increase in export orders over the past 18 months as the lower value of the pound has made British products more attractive in foreign currency terms.
However, the sharp decline in the value of sterling has “so far failed to trigger an export boom”, as the UK’s major exports are high-value-added industries and therefore less price-sensitive, Euler Hermes said.
Ongoing negotiations over the post-Brexit trading relationship add another layer of uncertainty, according to Ludovic Subran, chief economist at Euler Hermes.
He said: “The export success story could be short-lived if Brexit talks lack pragmatism and end up in a cliff-edge scenario with no transition deal by 2019. New trade opportunities confirm that a soft Brexit as a win-win situation.”