The UK is running a widening trade deficit, recorded as £5.1bn in June 2016. This figure represents the UK’s trade gap with the rest of the world. But the trade deficit with the EU is widening too. Imports have also hit a record high. So what is the immediate future for exporting opportunities, against the backdrop of historically low interest rates and the weakened pound?
Do Exporters Benefit?
Economic activity is all about balance. Figures may suggest that the UK is already entering a period of mild recession. Meanwhile the pound is much weaker, which should make exports from the UK cheaper and more attractive.
However British goods and services tend to be of a higher value, and therefore relatively inelastic when it comes to sensitivity to price change. Also, if uncertainty leads to lower investment and spending, then many firms may not be in a financially strong enough position to make the shift to selling to foreign markets.
Exporting Opportunities and the World Economy
No business exists in isolation. It thrives, or struggles depending on the circumstances in which it operates. While the current economic climate of post-Brexit uncertainty should favour exporters due to the weaker pound, it is less likely to benefit domestic consumers, savers or pension funds.
There is also the question of worldwide recession. Flexible firms may be able to start concentrating on foreign markets. This depends on whether or not the foreign markets are themselves in a position to want to buy more UK exports.
Again, it comes down to balance and to strategic considerations. Exporters have to consider their markets carefully, and what they can exclusively offer them. Higher end products and services may be less sensitive to price shifts. They are also less likely to be affected by drops in domestic productivity and spending, providing they have understood the overseas target markets they are aiming for.
The answer is to assume nothing, but to look for exporting opportunities where they arise and seize them. While maintaining a cool head and a strategic overview.