Euler Hermes UK Exporters’ Report

March 2009

UK exporters continue to struggle during global downturn

Key Points

UK exports stalled in February as global activity fell.

Substantial contractions in output and activity recorded across the Eurozone.

Sterling fails to provide boost to exports.

Summary

February data signalled that conditions in UK export markets continued to deteriorate, as further substantial declines in business activity among the UK’s major trading partners largely cancelled out any positive impacts on export trade from the weak pound.

The Euler Hermes UK Exporters’ Index, compiled by Markit, posted 51.7 in February, down from a reading of 53.3 in the preceding month. This suggested that exports from the UK have practically stalled (50.0 being a reading consistent with no change in exports). The principal reason for the deterioration in growth was a further sharp decline in global activity, and therefore an implied weakening of underlying demand for UK goods and services. This impact largely negated the continuing weakness of sterling, which remained at an historically low level in February. On a tradeweighted basis, the pound was 17% lower than one year ago.

The Euler Hermes UK Export Climate Index pointed to a further severe deterioration in the health of UK export markets during February as activity contracted worldwide. Moreover, the overall pace of decline accelerated to its second-fastest since data were first available at the start of 1998.

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Euler Hermes UK Exporters’ Report - March 2009