Cost of living crisis hitting UK exporters: Quarterly UK Exporter Monitor, Q2 2022

Quarterly UK Exporter Monitor, Q2 2022

The latest Quarterly UK Exporter Monitor by Coriolis Technologies in partnership with the Institute of Export & International Trade suggests that the cost-of-living crisis is having a significant impact on exporters. Analysis of in-house data as well as the recent Office of National Statistics (ONS) figures reveals that over the past year, the nominal value of exports has increased by 20% which is significantly higher than the annual inflation rate, which currently stands at 9%.

Since the start of 2022 there has been clear upward pressure on import prices: the cost of imports has increased by nearly 36% compared to May 2021 despite the volume of shipments to UK ports being 3% lower than they were a year ago.

The data shows that fewer UK companies are exporting, and even fewer goods have been exported but at higher prices over the past six months. The cost of imported goods has increased by over 35%, outweighing the increase in UK exporter values. Our research shows that UK exporters are employing fewer people, and exporter revenue has declined over the past six months. Any increase in the value of UK exports masks incredible upheaval within companies that export goods and services from the UK, putting further strain on the UK export community as prices of raw materials and components increase.

Coriolis Technologies Chief Executive, Dr Rebecca Harding said:

“We cannot hide from the fact that UK exporters have been under considerable pressure for a while now. This is the message of consecutive Exporter Monitors in the past two years. However, what is now being added to the picture is the cost of living crisis that is the result of supply chain shortages and increases in food and energy prices as a result of the Russia-Ukraine conflict.”

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

“What is clear from our analysis is this spike in the value of exports relates to cost of living pressures. Although the ONS figures point to a clear rise in the value of exports our data highlights this is against a backdrop of lower overall volumes of exports with fewer businesses now exporting.
More worrying is the dramatic increase in the cost of imports against a decline in volumes. These price pressures will continue to feed through to what consumers have to pay.
This is a worrying trend we have been tracking for some time now. Exporters need help and support if they are to drive jobs and lead growth in the UK economy.” 

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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