SME Exports to UK Remain Strong

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Posted by admin : Posted on December 20, 2016

DHL Express in Ireland reports that SME exports to UK remain strong despite Sterling decline and Brexit fears

  • DHL report that volume of exports from Irish SMEs to UK continues to grow despite Sterling decline and Brexit uncertainty
  • The report indicates that some smaller exporters have been ‘squeezed’ out of the UK market in certain sectors
  • Data also shows that SMEs who export to UK are successfully diversifying to other non-UK markets, which is a positive development

Dublin, Ireland, December 14, 2016: DHL Express, Ireland’s leading international express services provider, today reported on the results of a detailed study of their customers’ export trading from Ireland to the UK.  “We all know that the decline in the value of sterling has created pressure on Ireland’s exports to the UK,” said Bernard McCarthy, Managing Director DHL Express Ireland.  “The CSO has reported that the overall value of Ireland’s goods exports to the UK has declined by approximately 5% in the nine month period to the end of September.  However these high-level trade statistics don’t always tell the full story, so we decided to analyse our own data in some detail to gain further insight into how SME exports to the UK are performing.”

“At DHL Express we have over 2,000 customers who export to the UK – so we have a large sample size of exporters across the full range of exporting sectors,” continued Bernard McCarthy.  “As part of our analysis we have excluded our multi-national customers and other high volume exporters whose individual trading may distort the overall picture.  This leaves us with a large sample of Irish SMEs exporting to the UK, so the trading dynamics of these companies provides an excellent insight to the overall SME exporting experience.”

The results are very interesting and a lot more positive than one might otherwise expect to see.  In the period from January to June this year (the Brexit vote occurred on 23 June), the volume of exports to the UK from these SMEs grew by a very encouraging 8.7% compared to the same period last year.  Despite the further decline in the value of sterling since the Brexit vote, in the subsequent five month period from July to November the export volume has accelerated by a further 5%.”

Whilst there is strong growth in the overall volume of SME exports to the UK, the analysis does also show that some SMEs have been forced out of the market and there has been a decline of 4% in the number of SMEs exporting to the UK in the period since the Brexit vote.

The general consensus is that in the medium to long term, the best way to mitigate the risk that Brexit represents for Irish exporters to the UK is to diversify exports to new markets outside of the UK – and the DHL analysis indicates that this is starting to happen in practice.

“If we look at the same group of over 2,000 SMEs exporting to the UK and we examine the other markets they are also exporting to, we can see that the rate of growth to these other (non-UK) markets is increasing at a faster rate since the Brexit vote.  The volume growth to these markets has increased from 4% prior to the Brexit vote to 11% in the period since the vote.  This shows that SMEs exporting to the UK are diversifying to other markets which can only be a positive development in the longer term.”

Within this analysis Germany represents the biggest European market – and the fastest growing at 15%. The other main growth markets in Europe are Spain and France.  Outside of the EU the main markets that SMEs are successfully diversifying to are the USA (+34%) and Australia (+23%).  The USA growth is supported by a favourable euro to US dollar exchange rate.  There has also been a change in 2016 to US customs regulations which allows goods to be imported into the USA up to a value of $800 (previously $200) without incurring any import duties and taxes.

“Whilst Brexit clearly represents a challenge to SME exporters to the UK, our analysis shows that Irish SMEs are not abandoning the UK and indeed continue to grow export volume into this key market – whilst at the same time diversifying into new global markets.  This can only be a positive in the longer term,” concluded Bernard McCarthy.


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