The number of UK exporters that expect to have to increase their prices has gone up, according to a new report.
International traders are struggling with exchange rates, the value of the pound and pressure from the cost of raw materials and other overheads, according to the latest Quarterly International Trade Outlook from the British Chambers of Commerce (BCC), produced in partnership with DHL.
The report, based on a survey of over 2,600 exporters, shows that 49% of manufacturers and 39% of services companies plan to raise their prices, up from 41% and 34% in the previous quarter.
Exchange rates continue to weigh heavily on businesses, with 69% of manufacturers citing it as a source of concern. Weaker sterling is also pushing the cost of raw materials up for exporters, with 84% saying that this is putting pressure on their businesses. For services, overheads, such as office rents, are the leading source of price pressure (59%).
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Despite these issues, however, many exporters remain bullish - 57% of all exporters say that their turnover will improve in the next 12 months. The BCC/DHL Trade Confidence Index, a measure of the volume of trade documentation issued nationally (indicating trade outside the EU), rose by 4.06% on the quarter and stands at the fifth highest level on record.
Even so, the report finds that uncertainty because of Brexit is taking its toll. "These are uneasy times for many exporters concerned by persistent uncertainty around Brexit and future terms of trade with key partners," said Hannah Essex, BCC co-executive director of policy.
"At a time when all of the cogs of government seem to be jammed by Brexit, issues crucial to the UK's competitiveness and productivity have gone ignored. Business communities continue to shout about the scale of labour shortages … yet there has been little action relating to improvements in the UK's training or skills system, nor has the government's immigration blueprint delivered on calls for a system to provide easy access to skills at all levels."
The key findings from the report are:
- 37% of manufacturers and 29% of services saw an increase in export orders in the past three months, up from 35% and 24%;
- 18% of manufacturers and 15% of services sector firms saw a decrease in orders;
- 69% of manufacturers and 49% of service firms are more concerned about exchange rates than the previous quarter;
- 80% of manufacturers and 73% of services firms who attempted to recruit, struggled to find the right staff.