Resilient exporters stage swift recovery - Chamber report

West Midlands exports made a swift recovery during Q4 of 2020 - despite the backdrop of the pandemic and Brexit.

The latest Quarterly Economic Snapshot (QES) by the region 's three Chambers of Commerce reveals 17 per cent of firms reported an increase in international sales compared to 13 percent in the previous quarter.

Meanwhile, the percentage of businesses expecting their international output to increase over the next three months also increased from 15 per cent to 19 per cent, at a time when UK businesses were still facing a potential 'no-deal ' Brexit scenario.

However, the report shows a major discrepancy between the manufacturing and services sectors - most likely a result of firms stockpiling goods before the new trading arrangements between the UK and EU came into force on 1 January.

Twenty-nine per cent of manufacturers reported an increase in overseas sales - a return to pre- pandemic levels and the exact same figure recorded for Q4 of 2019.

But there was just a one per cent rise in services firms reporting an international sales increase.

In terms of UK sales, there was only a slight improvement in the number of businesses reporting an increase - 31 per cent compared to 30 in the previous quarter.

This is the highest figure recorded since the start of the pandemic and a significant improvement on the 11 per cent recorded in Q2 of 2020 during the first national lockdown.

The proportion of businesses experiencing cash flow problems has fallen slightly, with 44 per cent reporting a worsening position compared to 47 per cent in Q3.

The number of businesses reporting price pressures increased for the second consecutive quarter with 26 per cent expecting to increase their prices compared to 21 per cent the previous quarter.

The Quarterly Economic Snapshot, which covers the West Midlands Combined Authority area, is the most comprehensive regular report of its kind in the region.

Data is collected from quarterly surveys conducted by Greater Birmingham Chambers of Commerce (GBCC), Black Country Chamber of Commerce (BCCC) and Coventry & Warwickshire Chamber of Commerce (C&WCC).

Paul Faulkner (pictured), chief executive of the GBCC, said: “It was encouraging to see an upturn in the number of firms reporting an increase in international sales, but this is most likely to have been a temporary uplift as businesses understandably took precautionary measures to mitigate any potential disruption resulting from the end of the Brexit transition period.

“Even though a no-deal scenario has now been avoided, it is clear that firms trading internationally will face ongoing disruption in the coming weeks and months as they adjust to the new trade rules with the EU. The GBCC will continue to support businesses in adapting to the new trading arrangements and will be running a series of webinars and international training courses in 2021 to help bring businesses up to speed.

“Aside from export levels, there has been a slight upturn across a number of the key indicators compared to the last quarter including the proportion of businesses reporting an increase in domestic sales and improved cash flow.

“The recovery remained fragile over the course of Q4 and it worth bearing in mind that the surveying period took place prior to the announcement of the new variant of the virus and the subsequent tightening of restrictions.

“It is vital that the government takes urgent action now to support businesses through these critical next few months of the national lockdown as the vaccine rollout is scaled up.

“The Chamber is calling on the government to back our businesses by bringing forward a comprehensive package of support to help businesses survive this difficult period which will in turn bring about a stronger and faster economic recovery in the years to come. ”

Click here to access the full report.

Click here to read our Back our Businesses report outlining the support we would like to see from government.

Click here to access our Brexit Hub.