English and Welsh exports to EU on downward trend

24 July, 2023

The analysis of official data (1) as part of the Make UK/BDO Regional Manufacturing Outlook Report 2023 shows that the UK’s overall share of manufacturing exports to the EU increased in 2022 to 52% from 50% in 2019. However, this was a result of sharp increases in the share of exports to the EU from Northern Ireland and Scotland over the same period, without which the overall UK share of goods exports would also be on a downward trend.

Northern Ireland enjoys a unique Dual Access position retaining access to the Single Market for goods and being able to trade goods freely into the rest of Great Britain, while in Scotland the oil and gas sector and its supply chains boosted exports to the EU during the ongoing Ukraine crisis.

Furthermore, given the share of goods exports to both Asia & Oceania and North America has remained relatively stable at around 16% since 2019, this would indicate that UK manufacturers are looking at opportunities outside their traditional big three markets.

According to Make UK, this has significant implications for Government policy on export support if the share of trade with the UK’s nearest and most important market is falling and businesses are looking for opportunities elsewhere. In response, Make UK is calling for a boost to export support for companies, especially SMEs, as well as changes to existing structures to provide more support for companies exporting to countries outside the EU.

Verity Davidge, Director of Policy at Make UK, said:

“Given the EU remains the most important market for manufacturers, efforts still need to be made to improve the existing agreement with the EU to reduce barriers to trade. However, UK trade patterns may be undergoing a gradual shift with many companies continuing to look for opportunities in other markets. This has significant implications for export support and Government policy must reflect this.”

Richard Austin, Head of Manufacturing at BDO, said:

“These figures are reflective of the combined impact of Brexit, the pandemic and the Ukraine war. UK regions are the powerhouses of UK manufacturing but the body blows of the last few years are taking their toll. Manufacturers have warned that the shackles of red tape, supply chain pressures and rising costs are at risk of permanently undermining the competitiveness of UK goods.”

According to the analysis, only London & the South East and the East of England (49% to 50% and 49% to 54% respectively) have seen their share of goods exports to the EU increase since 2019 (the last full year before the Trade & Co-operation Agreement), whereas all other English regions and Wales have seen falls. By contrast, in the same period Northern Ireland has seen its share increase from 59% to almost two thirds (64%), while Scotland has seen an even sharper increase (50% to 59%).