LONDON: British firms are exporting more to the other 27 countries in the European Union, a state of affairs that will linger over the difficult discussions ahead on the UK’s future relationship with the bloc. Official figures released Friday show that seven of the top 10 destinations for British exports in 2017 were EU countries. Selling everything from cars to pharmaceuticals and gin, British firms exported some 37.7 billion pounds ($53 billion) worth of goods to Germany in 2017, around 13 per cent more than the year before. Germany accounted for 11 per cent of British exports, up a tad on the year before, and second overall behind the United States. Other EU countries in the top 10 included France, where exports spiked by nearly 30 per cent in 2017, and Ireland, the only EU country to share a land border with the United Kingdom. Overall, EU countries accounted for 48.8 per cent of British goods exports to the EU in 2017, up from 48.2 per cent the year before.
The increasing importance of the EU as a destination for British goods is largely due to the fact that Britain remains a member of the EU until March 2019. Exporters also enjoying a boon from the fall in the value of the British pound after the country’s 2016 vote to leave the bloc. Bank of England Governor Mark Carney has called it a “sweet spot,” with exporters benefiting from the near 20 per cent fall in the pound’s value against the euro “in anticipation of a Brexit that has not yet happened.” The euro, which is used by 19 EU countries, is now worth 0.89 pound, compared with around 0.75 pound before the referendum. But Brexit is happening and no one, it seems, quite knows what it will mean. That’s a particular problem for businesses that have enjoyed tariff-free trade with the EU for decades thanks to the bloc’s single market and its customs union.The Conservative British government has made clear that Brexit means leaving both the single market and the customs union. However, it hopes to negotiate a new free trade agreement that will prevent the return of costly customs checks and tariffs. A deep split within the Conservative party has emerged in recent months. Some lawmakers in Prime Minister Theresa May’s party want close ties with the remaining 27 EU nations and a period of transition after Brexit day. Others want a more fundamental break and are comfortable with the idea of tariffs on trade with the EU if it gives Britain more leeway to carve out trade deals with fast-growing economies around the world, particularly in Asia. May hopes to agree soon on the terms of a transition deal that would see Britain remain in the single market and customs union for a period after the Brexit exit. Carney has argued repeatedly that the outlines of a transition deal need should be in place by the end of the first quarter of this year so businesses can plan ahead. Many firms have held back investment amid the uncertainty and some, particularly in finance, have warned they could relocate some activities to the EU if the situation doesn’t become clearer. As we move through the Brexit process, more needs to be done to provide clarity on what the future trading relationship with the EU will look like,” said Suren Thiru, head of economics at the British Chambers of Commerce.
