The European Market – Too Close or To Close?

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The complexity of the English language often allows us to write a completely confusing sentence like the above headline, which nevertheless is good English, if a little clunky.

At some point quite soon, maybe this year, we will be asked to vote on whether we wish to remain part of the vast market that is so close to our shores, or leave it and close off the direct route to the single European market.

In reality, as with all such major decisions, there will be shades of grey that will result in a good old British compromise that will mean that the UK will still be doing business in Europe for many years to come.

For, contrary to popular understanding, many of the major European markets are now beginning to show some decent growth numbers, even some of the countries of Southern Europe, previously tagged as the PIIGS. Greece is the exception that continues to struggle, but with a GDP so small that it will not have any real effect on the whole, other than in a symbolic way.

The other acrynomic group of markets, the BRICS, have problems of their own. Russia and Brazil are in the grips of recession, with tumbling oil prices adding to Russia’s woes. China is seeing falling domestic demand with some commentators saying that the actual growth rate is nearer 3% than the reported 7%. India continues to forge ahead with above 7% growth, but with a few consequent fiscal pressures amid concerns about overheating. South Africa is beginning to slow down with business confidence at a low ebb.

The message for UK exporters is clear. We need to focus on markets close to home and for us that’s Europe. Forecasters are predicting that this year could see the strongest growth across Europe since 2007. Germany and Sweden are likely to be the biggest contributors, but many of the new member Eastern European states are seeing real growth – Poland, Czech Republic, Slovakia and the Baltic states.

Irrespective of what political decisions are made over the next 18 months, Europe will still be open to us – one way or another. The barriers may raise a little, it may squeeze margins a bit, we may have to try just a little harder but the reality is that 60% of our exports currently end up there. Those customers will still want our products & services and we should continue to strive to provide them.

The government’s Autumn Statement stated that they wished to make UKTI ‘more commercial’. It remains to be seen what that means, but we can be confident that the global infrastructure of commercial officers at embassies and consulates around the world will still be there for UK companies to take advantage of. DNA Business Engineering can complement those services and help SME’s and MSB’s to build their export strategies and make 2016 a year of real growth. If you would like to explore how an export plan could benefit your business call 01423 501161 and ask for Doug Jackson.