Value of UK exports expected to take until 2023 to reach pre-pandemic levels

Fri 10 Dec 2021
Posted by: Noelle McElhatton
Trade News

UK exports will increase by £55bn in 2022 amid strong global trade growth but will not return to pre-pandemic levels until 2023, according to new research.

The Global Trade Report by trade credit insurer Euler Hermes, a subsidiary of financial services giant Allianz, forecasts next year’s UK growth will come on top of a forecasted £18bn increase in 2021.

However these gains were offset by a £100bn trade loss in 2020.

Welcome growth

Ana Boata, head of economic research at Euler Hermes, said: “The UK’s export growth will be welcomed by beleaguered British businesses, but Brexit’s stifling effects will continue to stymie what should have been an even healthier recovery next year.”

The report forecasts that firms in UK services and automotive manufacturing sectors to be among the biggest winners, with exports to the US, Germany and Ireland registering the strongest growth.

Global growth despite supply chain issues

The report predicts that global supply chain disruptions could persist until the second half of 2022 amid renewed Covid-19 outbreaks around the world.

Despite this, Euler Hermes found no clear trend of reshoring or nearshoring of industrial activities, with the UK the only exception is the UK due to Brexit. Boata said: “Currently, 20% of current delays in suppliers’ delivery times could be explained by Brexit, with the rest attributable to global bottlenecks.”

Euler Hermes expects global trade overall to grow by 5.4% in 2022 and continue growing in 2023, with some clear winners across regions and sectors.

The report estimates that energy, electronics and machinery and equipment sectors should continue to outperform in 2022, with automotive expected to be the main export winner globally in 2023 as production recovers from Covid-19 stoppages.

Europe at risk

Europe more at risk than the US from a slowdown of Chinese exports of components and other inputs, the report says, due to a lack of local capital expenditure in production and shipping capacities. 

"Without production capacity increases and investments in port infrastructure, the normalisation of supply bottlenecks in Europe could be delayed beyond 2022 as demand remains above potential," the report says.