Export boom? Euro zone shows Britain how it’s done
Feted by some British newspapers as proof of a Brexit vote windfall, Britain’s recent export recovery ranks as the worst among Europe’s major economies, according to one closely-watched measure.
Surveys of manufacturers across Europe published by data firm IHS Markit on Monday underlined Britain’s challenge as it tries to become an export- led dynamo outside the European Union.
The export orders gauge of the UK Markit/CIPS Purchasing Managers’ Index slid to a fivemonth low in June.
While still indicating growth in exports, it left Britain as the weakest performer in terms of foreign orders, barring Greece, among big western European economies for a fourth month running.
That’s a poor return for the pound’s 12 per cent fall against a range of currencies since the Brexit vote a year ago.
It also casts doubt over the belief among some Bank of England officials that strong exports will help make up for a slowdown in consumer spending, suggesting the British economy could cope with a first interest rate hike in a decade.
“Sterling’s depreciation has been the least successful in Britain’s post-war history,” said Samuel Tombs, economist at consultancy Pantheon Macroeconomics consultancy. Since sterling began to fall at the end of 2015, net trade has dragged on the economy, unlike after earlier sharp falls in the exchange rate in 1967, 1975, 1992 and 2007/08, Tombs said.
Some indicators have suggested exporters are doing well.
The Confederation of British Industry’s gauge of manufacturing exports, which is based on a different methodology to the PMIs, hit a 22-year high in June.
But the official data is more muted: goods trade export volumes rose at an annual rate of 5.3 per cent in the three months to April, the best showing since January 2016 but still below rates seen through most of 2015.