Yellow fever: UK overseas trade in 2022
HSBC Head Economist Mark Berrisford Smith
After a torrid few years, the volume of British exports appears to be back above where it was before Brexit and Covid. But on closer inspection, this turns out to be an illusion arising from the UK’s role as a major hub for trade in precious metals, flows of which have expanded dramatically in recent years.
With the flows of gold excluded, export volumes briefly regained their 2018 level in the middle of last year, before another downturn took hold, reflecting the deteriorating economic conditions in most major export markets. On this basis, the UK’s export recovery has been weaker than any other major economy.
The UK’s export recovery has been hampered by its particular mix of goods and services, including a reliance on tourism earnings and car exports. There is evidence that Brexit has had a negative impact on exports of food and on earnings from financial services.
The coming year holds out the prospect of a modest revival, as China re-opens and as the supply bottlenecks in the automotive sector clear. More generally, lower commodity prices, especially for natural gas, mean that most major economies will avoid slipping into recession, thereby supporting global trade.
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