The WTO is forecasting trade growth of less than 4% this year, following 5% in 2011, which was itself lower than average over the long term. Moreover, since a lot of the slowdown in trade growth reflects the weakness of demand across the euro-zone, it is not good news for many exporters in SW England, for whom the euro-zone is the prime market. Almost two-thirds of SW exports in goods go to the euro-zone and a similar ratio is concentrated in advanced engineering (mostly aerospace and motors).
Foy years, analysts of the region, like myself, have argued that SW businesses, generally, were not export-orientated enough: SW England generates nearly 8% of UK total output but little more than 4% of UK exports. Whether it is the relatively meagre amount of international tourists visiting much of the region, or the lack of aspiration to find new markets amongst local food and drink suppliers, or the weak engagement of business services outside the area, or the concentration of goods exports in a relatively few manufacturing industries, SW international performance has been, on average, modest at best.
In times of strong domestic growth, this was less of an immediate problem. Now, of course, consumer and public sector current demand is under pressure because real incomes are dropping, reflecting the downturn and austerity policies. For a domestically-focussed region like SW England, this is not good news and ‘rebalancing’ to new markets and investment in new products and services becomes even more desirable. Diversification by place and sector is what more aspirational SW businesses now need to pursue.