UK Exports To Foreign Markets Will Ease Brexit Blues

UK trade prospects after Brexit will depend on businesses reorienting their export efforts toward non-EU markets in Asia, Africa, and the Middle East.

UK economic growth has held up better than expected after the vote to leave the European Union. This is particularly true when it comes to consumer spending. Although that’s good for now, the increased political and economic uncertainty surrounding Brexit is expected to slow growth to approximately 1.2% in 2017. Albeit this would avoid a recession in the UK, it’s still much slower than the 2% the country saw in 2016.

I have heard analysts predict that the proportion of UK trade en route to the 27 European countries could fall from 44% to approximately 30% by 2030. If that is in fact the case, the UK’s trade prospects after Brexit will depend on businesses reorienting their export efforts toward faster growing non-EU markets.

This reorientation would be most effective in areas where the UK has relative strengths; like key emerging market regions in Asia, Africa, and the Middle East. Experts suggest that these emerging markets could account for 65 to 70% of total UK exports, by 2030.

Even though there has been a recent downturn in trade growth outside the developed economies, it should prove temporary; and the UK’s export growth to markets outside the EU should gain momentum soon. It has been suggested that Free Trade deals may help this strategic shift in the longer term.

Some UK companies have benefited from the weaker pound that resulted from Brexit. In this case, exports from the UK have become more attractive to foreign buyers. This is good because company earnings in currencies other than the sterling — like the strong U.S. dollar — are (currently) worth more when brought back into the UK.

At the moment the top export destinations of the United Kingdom are the United States ($51 billion), Germany ($46.5B billion), the Netherlands ($34.2B billion), Switzerland ($33.6 billion), and France ($27 billion).

With continuing political and economic uncertainty in the UK, it is definitely a challenging time to be an investor. That said, I am not one to sit idly by on the side lines. I believe that now, more than ever, is an important time to consider adding more alternative investments to my portfolio.