Responding to the latest ONS figures on GDP and trade for August 2022, Paul Slevin, Executive Chair of Chambers Wales South East, South West and Mid, said:
“Today’s UK GDP data compounds fears that the economy is heading towards recession as we battle the cost-of-living crisis and other significant challenges.
“Results from our recent quarterly economic survey show that more than half of Welsh businesses feel that a recession now will be more challenging than the impact of lockdown in 2020. 68% of Welsh businesses have already seen their sales stall or decrease in the past 3 months.
“The Welsh and UK Governments must do all they can to support our businesses by rapidly providing more detail on their fiscal policies and supply side reforms, particularly at a time when businesses face the twin crises of rising interest rates and high inflation.
“The six-month energy support package will have provided some breathing room, along with the Energy Bill Relief Scheme, but businesses need surety to provide them with the confidence to not only survive but thrive in this period ahead.
“In terms of trade, although the UK’s deficit in trade goods has widened, exports have increased, particularly to non-EU countries, with the private sector playing an important role in this, especially in the exporting of machinery.
“Awareness of free trade deals must be an area of focus, along with bringing companies into the fold on future trade negotiations. Decisive action needs to be taken to reduce some of the removable red tape costs for traders.
“Despite a period of immense challenges, many Welsh businesses remain optimistic, with 47% expecting turnover to increase over the next 12 months. They must hold on tight to this optimism and not underestimate the power of the private sector to reverse the downward trend we are facing.”
Trade data overview from the British Chambers of Commerce:
Exports
UK goods export values in August 2022 failed to maintain their recent momentum as goods exports to the EU fell by 0.5% driven by a fall in chemicals and fuels exports. Non-EU exports rose by 4% in August, led by big rises in machinery and transport exports, fuels and miscellaneous goods. Overall, goods exports rose by only 1.2% compared with July.
Comparing the 3 months to August 2022 with the three months to May 2022, EU goods export values were 6.2% higher over that period compared with a 1.8% rise in non-EU goods export values.
Imports
Goods import values continued to rise in August again driven by elevated levels of fuel imports from non-EU states such as Norway and Qatar. Imports from the EU declined by 1.9% but non-EU goods imports values were at their highest levels since records began in 1997.
The effect of high gas prices in August 2022 played strongly into the rise in values of non-EU goods imports into the UK.
Trade Deficit
This leads to a widening of the UK’s deficit in trade in goods, rising to £61.9bn in the three months to August 2022. The trade in services deficit narrowed further in the three months to August 2022 to £36.3bn as exports continued to rise. Excluding inflation, the overall trade deficit was £6.5bn lower at £11.9bn in the three months to August 2022. Before removing the effects of inflation, the raw data indicated a slight widening of the trade deficit.
