Downside Risks to UK Exporter Employment: Monthly UK Exporter Monitor, March 2022

Monthly UK Exporter Monitor, March 2022

Exporter counts and revenues have gone up by 2.33% and 2.99% respectively across all UK regions in March 2022 compared to February 2022. However, this is roughly half the growth rate we predicted in our last forecast reflecting the downside risks and in no sense goes far enough to correct the down

Despite a mild uptick in counts and revenues of exporters, employment has fallen back by nearly 8% since February to the lowest it has been since January 2021. This indicates a risk aversion amongst exporters: faced with challenges in their supply chains, rising costs and the evident challenges of the Russia-Ukraine crisis, the uncertainties ahead are driving UK exporters to take measures to increase their efficiency.

As noted in February’s Exporter Monitor, it is large businesses that are particularly impacted in terms of the drop in employment, with 10.77% fewer employees compared to March 2021, suggesting that these are the ones that would be most exposed to shifts in the sanction’s regime and longer-term economic disruption.
The results corroborate the longer-term picture given by the Office of Budget Responsibility last month suggesting that exports had declines by 15% over the past year. The exporter monitor has been suggesting a downward trend in counts, revenues and employment for some 12 months now and, despite a small pick up recently, the UK is still below the levels it was this time last year.

Coriolis Technologies Chief Executive, Dr Rebecca Harding said:

“The data shows that there a potential uptick was about to hit UK exporters after the joint shocks of pandemic-induced supply chain shortages and the aftermath of Brexit. However, the risks associated with new and pending global geopolitical turbulence may dampen the fuse of any post-covid spark to the economy.”

Institute of Export & International Trade director general,  Marco Forgione said:  

“Although, this recent uptick in exports is a welcome boost it cannot mask the overall problems facing businesses. The triple whammy of global supply chain shocks, Brexit, and ongoing geopolitical turmoil are proving a disincentive to export; it paints a worrying picture for UK exporters looking for that post covid boost. But businesses shouldn’t be discouraged, opportunities are out there, and we firmly believe that with the right training and support UK businesses can succeed in global markets.”

Methodology:

  • Method:
    Coriolis Technologies has matched UK exporter data from Customs and Excise sources with Bill of Lading data and large-scale publicly available datasets. UK HMRC data covers the names and addresses of all UK exporters who send products through customs and excise. These names were matched to Bureau van Djik FAME data to establsh turnover and employment levels. To establish the numbers of service sector companies with export revenues, Coriolis took those businesses in the FAME database with international turnover to collect sector and employment as well as turnover information. The sector distribution of exporters in goods and services was then applied to the sample of companies which did not have turnover or employment data to scale the whole dataset to establish counts, turnover and employment for the UK as a whole. Companies were taken from an HMRC sample going back to 2017 and any duplicates with international turnover data from FAME data removed.
  • The forecasts are based on a statistical “General Additive” modelling framework which decomposes each time series (each exporter count group) into a couple of main components:
    • trend
    • seasonality – effect of calendar month or season
    • changepoints – moments where the trend shifts
    • special calendar events
  • These effects are smoothed, added together and extrapolated into the future to create forecasted values for each exporter group separately. The model is optimized to explain as much variability in the time series with as simple model as possible.
  • The estimated forecasting error is within 1.7% of the actual value, back-tested on the actual forecasting performance over the past 2 years for the aggregate forecasts and for the forecasts by size and UK nation

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