Germany’s exports are now growing faster than the UK’s as the weakened pound fails to deliver the boost that some analysts had predicted.
Previously, the UK’s strong performance had been spurred by a pickup in the global economy and the fall in the value of sterling, which made British products more competitive.
However, weak sterling has also pushed up the price of UK firms’ inputs, which in turn has caused them to raise the prices of their exports, research from accountants BDO shows.
As a result, export growth for UK firms weakened in the third quarter of the year, according to an index compiled by the Centre for Economics and Business Research on behalf of BDO.
Germany’s industrial firms have powered ahead over the same period, the index shows.
Germany’s export growth index – which combines data from a number of official sources to chart annual growth in total exports – has risen to 106.6 in the third quarter of this year, up from 101.6 in the previous quarter.
Export expectations among German industrial firms are now at their highest level in more than six years on the back of rising demand from the US.
Spain’s export growth has also been robust. Its export growth index sits at 103.6 for the second quarter running, well above the long-term growth trend.
By comparison, the UK’s export growth rate is starting to slow down, with the index falling from 104.8 to 101.5 in the third quarter of 2017.
The make-up of UK exports has also been shifting over the years. In 1995, manufactured goods contributed to about 60 per cent of all exports compared with just 45 per cent today.
The most significant manufactured export is motor vehicles, which accounted for 12.7 per cent of the total. More than half of UK car exports in 2016 were sold to the EU whereas just under 15 per cent were sent to the US, underlining the importance of unhindered access to the European market after Brexit.
Commenting on the findings, Peter Hemington, a partner at BDO, said: “The post-referendum lift experienced by UK exporters is starting to wane as the high rate of inflation causes an increase in the price of products.
“German exporters are therefore better placed to take advantage of the renewed demand coming from across the Atlantic and it leaves UK exporters in a vulnerable position.”