Trade data out today and it's not a pretty picture for 2012q2.
The deficit in trade in goods (ex oil) increased more than £2.5 billion in 2012q2 compared with 2012q1, with the overall trade deficit increasing by more than £3 billion. This doesn't bode for rebalancing our economy towards generating more growth from trade.
Our gold, silver, and bronze medal export destinations of Germany, the U.S., and France each saw falls of around £400-500 million in exports in 2012q2 (but conversely imports from Germany and the U.S. actually rose slightly).
More positively our gold medal export destination for growth, South Korea, saw UK exports continue to increase (by over £350 million) in 2012q2. China, our silver medal growth destination, was largely static.
So what to make of all this?
As we noted in our press comment, it's important not to get too worked up given the one-off factors in 2012q2 especially the Jubilee holidays but also the weather.
But on the other hand 2012q3 will need to see a serious bounce back to avoid the conclusion that rebalancing is off track.
What is the government's role in promoting exports as part of focusing *110%* on growth?
Three noteworthy mentions:
Strategic goal of doubling exports to £1 trillion by 2020
UKTI support for exporters
UKEF - finance products for exporting
The government's goal to get exports to £1 trillion was announced around the time of Budget 2012. It certainly is ambitious...requiring similar export growth to that seen in fast-growing export countries like South Korea every year up to 2020. But it is an important - and measurable - benchmark by which the government can hold its more detailed export promotion activities to account.
UK Trade and Investment is an effective government agency providing a range of services to promote UK exporters (and inward investment into the UK). Services include the Overseas Market Introduction Service that is a vital route into new markets - especially for companies new to exporting.
Then there is the recently renamed UK Export Finance agency. This agency is charged with making it easier for firms to trade by providing finance products to improve the cashflow and migitate the risk of trading with overseas customers.
While the intent of both agencies is good, the awareness of the support they offer is not so good - especially for the little-known UK Export Finance.
That's another reason the government's events at Lancaster House during the Olympics have been important - not just for highlighting opportunities to overseas investors and customers - but also to hopefully raise the profile of what support is avaiable to UK companies.
The challenge is how to build on this momentum and keep increasing awareness - this is where the government needs to think carefully about its near-universal ban on promotional/marketing spend. Is it really worth saving a few £ million on marketing spend if we're relying on trade delivering £ billions more in growth to drive the UK recovery?