Uncertainty hampering exports

AS MANY as 9,000 UK firms either stopped exporting or chose not to start selling abroad in 2016 because they did not know what would happen to trade rules and border taxes.

This took up to an estimated 1pc off Britain’s exports after one year.

However, that figure could grow over time as companies which would have become major exporters never get the chance to explore new markets overseas.

Research published by the Cambridge academics Meredith Crowley, Oliver Exton and Lu Han found that a one percentage point rise in the threat point tariff – that is, the fallback position should negotiations fail, so in this instance the rise in World Trade Organisation tariffs – reduced the growth in new exporter numbers by 1.1 percentage points, and increased the rate of those deciding to quit export markets by 0.5 percentage points.

This meant an estimated 5,221 companies did not start exporting new products to the EU in 2016.

Meanwhile, another 3,850 firms stopped exporting to the bloc.

As a proportion, entry would have been 5.1pc higher and exit 4.3pc lower,

they found. “We estimate that the decline in entry reduced the value of exports by between £226m and £1.4bn in 2016, a small total value relative to total exports to the EU in 2016 of £140bn,” said the academics.

Meanwhile, a separate study has found that skilled migrants can boost export industries and productivity in their new home countries by bringing a stock of knowledge which could not otherwise be passed easily across borders.

Dany Bahar at the Harvard Center for International Development and Hillel Rapoport at the Paris School of Economics found a 10pc rise in the immigrant population from a country with a specific export sector increased the chance of their new country developing an export industry in that product over the next decade by 2pc.

The economists pointed to historical examples including Franschhoek valley in South Africa which was settled by Huguenots fleeing France in the 17th century, turning it into one of the country’s prime wine exporting regions today.