Safer trading for Bristol exporters #2
1
From economic insecurity in key export markets to political uncertainty in the UK, Bristol’s small businesses operate in an increasingly unpredictable environment. As Coface’s Grant Williams explains, finding sources of reliable information provides the best protection. British businesses have had a head start on their Eurozone rivals as the UK’s recovery increased momentum over the last year. The Port of Bristol has been synonymous with overseas trade for centuries so it’s no surprise that businesses here are already some of the most dynamic exporters in the UK. The South West was one of only three English regions to see an increase in export value in 2014 (up 1%) with the value of exports to Germany increasing by 3.6% and those to the Irish Republic up by 14.2% over the year 1 . But alongside the positive economic news has been a less welcome trend: the trading environment, particularly for exporters, is becoming more unstable. And yet, the picture for businesses is considerably more nuanced than these headlines suggest. For example, it’s not unusual for particular industry sectors to thrive within countries where overall economic growth is anaemic – new car registrations in the UK began to grow in 2011 when the rest of the UK economy appeared to be struggling. Equally, companies operating in more volatile sectors such as construction can still be profitable trading partners. In other words, SMEs can still find new trading opportunities and safely extend credit to new customers, provided they are fully informed about the potential risks and take prudent steps to protect their balance sheet. Information and protection As a global leader in domestic and export credit insurance, Coface’s underwriters and economists have access to a wealth of data about the corporate behaviour of more than 65million companies worldwide. As well as informing credit limits for our clients, we also use this to produce detailed country and sector risk analyses which are freely available at www.cofaceuk.com/economic-studies. On Thursday 4 June 2015, Coface is holding its annual Country Risk Conference in London, which provides invaluable intelligence about domestic and overseas trading conditions. This year’s programme features contributions from leading economists and other industry experts representing Coface as well as organisations such as Lloyds Banking Group, Deutsche Bank AG and Harley-Davidson Europe. Topics include the outlook for the UK economy, the pace of Europe’s recovery and the impact of geopolitical risk on international trade. Places at the conference are limited but you can register your interest by emailing [email protected] All Coface’s risk assessment services have an important practical purpose: helping you towards a more detailed understanding of trading conditions in established and emerging markets. However, that is one half of the equation for successful and safe exporting: In our next article, I will explain how we can help you protect your business as you expand your business horizons. References 1 Regional Trade Statistics Fourth Quarter 2014, HMRC, 5 March 2015 2 Panorama: Barometer sector risks in the world, Coface, April 2015 3 Infographics worldwide risk map, Coface, March 2015 Safer trading for Bristol exporters The uncertainties facing businesses include: • At the time of writing, it was impossible to predict a clear winner in the UK General Election and another coalition or an unstable minority Government is the most likely outcome. • Depending on the party in power and its allies, there could be a referendum on the UK’s membership of the European Union or even another vote on the issue of Scottish independence. • The fluctuating price of oil: while falling oil prices reduce production costs, they are a real concern within the energy sector and countries that are more reliant on oil or gas revenues. • The possibility that sustained low inflation will turn into deflation. • Geopolitical risks, including tensions between the West and Russia and the threat of terrorist organisations to countries in the Middle East and Africa. Recent reports from our team of economists include: • Barometer of sector risks which evaluated trendswithin a range of important industries 2 including energy, construction and metals in different regions of the world. For example, we upgraded our risk assessment of the European chemicals sector because of falling| production costs thanks to cheaper oil and the euro’s depreciation against the dollar, as well as the generally improving economic outlook. At the same time, we downgraded the North American energy because of falling profitability and cuts in investment within the shale oil sector. • Our worldwide risk map 3 which graphically shows how the probability of corporate default has increased in countries such as Brazil, Kuwait and Russia. The five least vulnerable advanced countries in the medium term are Germany, Belgium, South Korea, Netherlands and Switzerland.
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From economic insecurity in key export markets to political uncertainty in the UK, Bristol’s small businesses operate in an increasingly unpredictable environment. As Coface’s Grant Williams explains, finding sources of reliable information provides the best protection.
Transcript of Safer trading for Bristol exporters #2
From economic insecurity in key export markets to politicaluncertainty in the UK, Bristol’s small businesses operate inan increasingly unpredictable environment. As Coface’sGrant Williams explains, finding sources of reliableinformation provides the best protection.
British businesses have had a head start on their Eurozone rivalsas the UK’s recovery increased momentum over the last year.
The Port of Bristol has been synonymous with overseas tradefor centuries so it’s no surprise that businesses here are alreadysome of the most dynamic exporters in the UK. The SouthWest was one of only three English regions to see an increasein export value in 2014 (up 1%) with the value of exports toGermany increasing by 3.6% and those to the Irish Republic upby 14.2% over the year1.
But alongside the positive economic news has been a lesswelcome trend: the trading environment, particularly forexporters, is becoming more unstable.
And yet, the picture for businesses is considerably morenuanced than these headlines suggest. For example, it’s notunusual for particular industry sectors to thrive within countrieswhere overall economic growth is anaemic – new carregistrations in the UK began to grow in 2011 when the rest ofthe UK economy appeared to be struggling. Equally, companiesoperating in more volatile sectors such as construction can stillbe profitable trading partners.
In other words, SMEs can still find new trading opportunitiesand safely extend credit to new customers, provided they arefully informed about the potential risks and take prudent stepsto protect their balance sheet.
Information and protectionAs a global leader in domestic and export credit insurance,Coface’s underwriters and economists have access to a wealthof data about the corporate behaviour of more than 65millioncompanies worldwide. As well as informing credit limits for ourclients, we also use this to produce detailed country and sectorrisk analyses which are freely available atwww.cofaceuk.com/economic-studies.
On Thursday 4 June 2015, Coface is holding its annualCountry Risk Conference in London, which provides invaluableintelligence about domestic and overseas trading conditions.This year’s programme features contributions from leading
economists and other industry experts representing Coface aswell as organisations such as Lloyds Banking Group, Deutsche
Bank AG and Harley-Davidson Europe. Topics include theoutlook for the UK economy, the pace of Europe’s recoveryand the impact of geopolitical risk on international trade.
Places at the conference are limited but you can register yourinterest by emailing [email protected]
All Coface’s risk assessment services have an importantpractical purpose: helping you towards a more detailedunderstanding of trading conditions in established andemerging markets. However, that is one half of the equation forsuccessful and safe exporting: In our next article, I will explainhow we can help you protect your business as you expandyour business horizons.
References1 Regional Trade Statistics Fourth Quarter 2014, HMRC, 5 March 2015
2 Panorama: Barometer sector risks in the world, Coface, April 2015
3 Infographics worldwide risk map, Coface, March 2015
Safer trading for Bristol exporters
The uncertainties facing businesses include:
• At the time of writing, it was impossible to predict aclear winner in the UK General Election and anothercoalition or an unstable minority Government is themost likely outcome.
• Depending on the party in power and its allies, therecould be a referendum on the UK’s membership of theEuropean Union or even another vote on the issue ofScottish independence.
• The fluctuating price of oil: while falling oil pricesreduce production costs, they are a real concern withinthe energy sector and countries that are more relianton oil or gas revenues.
• The possibility that sustained low inflation will turn intodeflation.
• Geopolitical risks, including tensions between the Westand Russia and the threat of terrorist organisations tocountries in the Middle East and Africa.
Recent reports from our team of economistsinclude:
• Barometer of sector risks which evaluated trendswithina range of important industries2 including energy,construction and metals in different regions of theworld. For example, we upgraded our risk assessmentof the European chemicals sector because of falling|production costs thanks to cheaper oil and the euro’sdepreciation against the dollar, as well as the generallyimproving economic outlook. At the same time, wedowngraded the North American energy because offalling profitability and cuts in investment within theshale oil sector.
• Our worldwide risk map3 which graphically shows howthe probability of corporate default has increased incountries such as Brazil, Kuwait and Russia. The fiveleast vulnerable advanced countries in the mediumterm are Germany, Belgium, South Korea, Netherlandsand Switzerland.
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